The Fed decides on interest rates Wednesday. Here’s what to expect

This week’s Federal Reserve meeting offers little suspense and probably not much action, even as massive changes loom over the central bank’s longer-term direction.

Judging by market expectations and policymakers’ comments, there’s virtually no chance the Fed will change its benchmark interest rate when the meeting ends Wednesday.

Despite a recent spate of disagreements among Federal Open Market Committee members about the longer-term trajectory of monetary policy, the near-term stance likely will be one of patience as a series of cuts made last year work their way through the economy.

“Overall, the Fed just wants to stand pat. They feel they’ve got time to wait and see,” former Fed Vice Chair Roger Ferguson said in a CNBC interview Monday. “This feels like a wait-and-see meeting, and we should all be listening to see if there’s any hint or a bias towards a future action.”

Indications of where the FOMC heads from here would come from the post-meeting policy statement as well as Chair Jerome Powell‘s news conference afterward. Markets currently expect the Fed to cut once or twice this year — most likely in June and December, according to futures market pricing gauged by the CME Group’s FedWatch tool.

However, the focus most certainly will lie beyond the interest rate decision and future guidance and into an unprecedented web of intrigue that surrounds the meeting.

Storm around Powell

For one, President Donald Trump told CNBC last week that he may have narrowed down his search for Powell’s successor to a single candidate, a nomination that could be announced this week and perhaps even timed to coincide with the Fed rate decision.

“If there is a single most likely window, it’s during the January FOMC — particularly if Trump is looking
to redirect attention away from a Fed that didn’t cut,” Stephanie Roth, chief economist at Wolfe Research, said in a note. “More broadly, the decision could come as soon as this week, or within the next couple of weeks.”

Also operating in the background: The Justice Department has served Powell with a subpoena seeking information on the Fed’s massive renovation project on its Washington, D.C., headquarters. In an unusually candid videotaped statement, Powell called the probe a “pretext” for Trump’s desire to bully the Fed into cutting rates even more aggressively than it has in recent months.

There’s uncertainty elsewhere, too, with Trump’s effort to unseat Fed Governor Lisa Cook over mortgage fraud allegations in front of the U.S. Supreme Court last week, and Trump appointee Stephen Miran’s term expiring Saturday. Fed governors can serve until they are replaced, so it’s not clear how much longer Miran will stay on the board. He dissented from each of last year’s three, quarter percentage point rate cuts, favoring even…