Federal Reserve officials are likely to hold short-term interest rates steady at their policy meeting next week and leave open-ended when they’ll next raise rates given their uncertainties about markets and global growth.
For Fed Chairwoman Janet Yellen, that likely means crafting a message that gives the central bank flexibility to lift rates in April or June should the economy perform well in the weeks ahead, without committing to a move in case economic data disappoint or new market turmoil erupts.
The Fed in December raised its benchmark federal-funds rate from near zero to a range between 0.25% and 0.5% and signaled officials expected more rate increases in 2016. They next meet March 15-16, and on Tuesday began a week of closed-door deliberations about how to proceed.
Recent comments by officials showed they are relieved by recent signs the economy is weathering headwinds from slowing global growth and turbulent financial markets. Their forecasts for modest growth and continued hiring, which will be updated before the meeting, appear to be holding up. In December, they projected the jobless rate would drop to 4.7% by the end of 2016 and that economic output would expand 2.4% this year. The unemployment rate was 4.9% in February.
However, officials are weighing mixed signals on inflation, which has been running below their 2% goal for nearly four years. Moreover, they’re wary of raising rates prematurely given the fragile state of the global expansion and their own limited scope for providing support should the U.S. economy weaken.
Read more: Wall Street Journal.