The U.S. Federal Reserve on Wednesday could offer fresh clues on when it plans to begin lifting interest rates and how quickly it will move, as it prepares for a momentous policy turn after years of aggressive monetary stimulus.
Although a tightening of monetary policy is not expected until mid-2015, the central bank could use a policy statement on Wednesday to lay important groundwork. In particular, speculation is rife the policy-setting Federal Open Market Committee may change its guidance on how long it is likely to keep rates near zero. The panel may also alter its depiction of the labor market to suggest further progress toward its goal of full employment. Both would signal that a six-year freeze on rates is thawing. Although the market is betting on a policy change, the Fed could also stick to its script.