The Federal Reserve is expected to raise interest rates by a quarter point Wednesday and signal it will not be pushing rates higher as much as it had previously forecast.
Strategists say that may soothe volatile financial markets, but the Fed has a tough task in explaining its actions in a way that will not sound too alarmist about the economy or too unconcerned about deteriorating financial conditions.
The Fed is seen as likely to take the fed funds rate range to 2.25 to 2.50 percent and to remove language in its post-meeting statement that says it will continue with "gradual" rate increases. The Fed has said it expected to raise interest rates three more times next year, but economists now think that will change to show two more hikes next year, with another possible in 2020.
"The economy is decelerating. They were too optimistic on their outlook, but by the same token, they're going to have to walk a fine line that they're not overly concerned," said George Goncalves, head of fixed income strategy at Nomura. "They're just going to take it down a notch."
The Fed releases its statement and projections at 2 p.m. ET, and Powell will speak at 2:30 p.m. Stock futures pointed to higher openings Wednesday morning.
The Fed's move Wednesday afternoon is coming against a backdrop of financial market turbulence. Markets have been reacting to concerns about rising interest rates as well as concerns that trade wars and weaker global data could lead to a recession. Fed Chairman Jerome Powell, unlike other Fed chairs, has also faced a stream of criticism from the White House, with President Donald Trump protesting rate hikes and in a tweet on Tuesday, the Fed's balance-sheet policy.