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 That will be a big change from the last time the Fed met, when
uncertainty over the impact of slower growth in China and Europe
drove policymakers to signal it would stay on hold until it could
make a better call on the outlook.
That in turn was a setback from just a month earlier, when the Fed
raised rates for the first time in nearly a decade and seemed ready
to move four more times this year.
This week, fresh forecasts from the Fed's 17 officials released
after the meeting will almost certainly signal a retreat from that
pace, to perhaps two or three rate hikes this year, economists
predict and Fed officials themselves have suggested.
But the expected downgrade may largely reflect the drag from the oil
and stock market slide in January and the Fed's decision then to put
policy on hold, rather than mounting worries over the U.S. or global
outlook.
Indeed, since the last Fed meeting U.S. inflation has shown signs of
stabilizing, with one measure published by the Dallas Fed rising to
1.9 percent, its closest to the Fed's 2 percent goal in 2-1/2 years.
Meanwhile, the U.S. unemployment rate held at 4.9 percent in
February, near the level many Fed officials believe represents full
employment.
 The European Central Bank's decision last week to ease policy
further may help add to confidence that action has been taken to
underpin growth in Europe, helping ensure a stalling of global
growth drag on the U.S.
That could mean another U.S. rate hike by mid-year and, depending on
economic data, more to come after that.
"June seems certainly like a possibility" for the Fed's next rate
hike, said former Minneapolis Fed President Narayana Kocherlakota,
whose own preference is for the Fed to take out "insurance" against
a recession by cutting rates back to near zero. Market-based
inflation expectations have improved somewhat since the Fed's last
meeting, he said, "a real positive" development. INFLATION DEBATE
Still, Kocherlakota's former colleagues will likely spend plenty of
time discussing the inflation outlook. That much was clear last
week, when two top Fed officials, speaking simultaneously at
separate Washington events, gave diverging assessments of recent
evidence of rising prices.
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More hawkish rate setters worry that if the Fed does not act to
preempt inflation, it could end up behind the curve and lose
credibility, while the more dovish members believe the economic
recovery is still fragile and want to see firm evidence of
inflationary pressures.
"That’s probably internally the biggest grounds for debate," said
Regions Financial Corporation economist Richard Moody.
The Fed will also need to tackle how to characterize the "balance of
risks" to their baseline outlook, he said, particularly if
policymakers want to keep the door open to rate hikes in April or
June.
"If they truly want the markets to believe that all the meetings are
on the table (for a potential rate hike) then I would think they
have to have something in there," Moody said, predicting they will
characterize risks as "nearly balanced," the same phrase they used
before December's rate hike.
And yet, others say, Fed Chair Janet Yellen will be wary of sending
too strong a signal of coming rate hikes, for fear of roiling
markets.
"By June they will have a broad clutch of data and that could help
them, and even some of the doves the Federal Open Market Committee,
to come to a solid conclusion (on the desirability of a rate hike)
and a conclusion, by the way, that the market agrees with," said
Quincy Krosby, a market strategist for Prudential Financial.
(Reporting by Ann Saphir; Editing by Meredith Mazzilli)
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