The Federal Reserve is expected to hold interest rates steady Wednesday, with new economic projections out from policymakers that will show if they still see rates moving lower by the end of the year as they sort through the implications of the first two months of the Trump administration.

NEW POLICY STATEMENT

A new policy statement and the projections will be released at 2 p.m. EDT (1800 GMT) at the end of a two-day meeting focused on how the economic outlook has shifted since President Donald Trump's January 20 inauguration. Fed Chair Jerome Powell is scheduled to hold a press conference a half hour later.

Since returning to the White House, Trump has unveiled tariffs on imports from China and on primary metals and has threatened broader taxes on imports from U.S. trading partners next month; imposed restrictions on immigration; and initiated layoffs of federal employees that may mount into the tens of thousands.

After the election and through the Fed's January 28-29 meeting, policymakers spoke of mounting uncertainty about how the new administration's plans might influence an economy they felt was otherwise strong and poised for continued growth with slowing inflation.

The Fed cut its benchmark rate by a full percentage point last year as inflation slowed, with policymakers anticipating they were on a steady march towards a neutral interest rate, the level that neither stimulates nor restricts economic activity.

With initial repercussions from the administration's actions felt in stock and bond markets, falling confidence, and a drop in government employment, the coming projections may provide more details on whether Fed officials expect slower growth and higher inflation as a result, or a more benign outcome.

A recent Reuters poll showed economists were nearly unanimous in feeling that recession risks have risen. Surveys of business and consumer confidence have weakened, and administration officials have acknowledged their actions could be costly, at least in the short run.

"Trump is engineering a 'trade shock' that will drop the economy to a lower growth path," said Steven Blitz, chief U.S. economist at TS Lombard. "There is little monetary policy can do to offset a trade shock through tariffs ... except to counter rising unemployment and/or inflation, and the economy could end up with both."

FRAMING OF DEBATE

The headline data most watched by the Fed on inflation and unemployment so far has yet to register much of an impact from Trump's plans. The jobless rate edged up to 4.1% in February and the economy added 151,000 jobs; inflation remains above the Fed's 2% target with a coming read for February expected to show a slight increase, but policymakers so far have continued to bank on a drop this year.

The Fed's new projections will include year-end estimates from all 19 policymakers for overall growth, unemployment, inflation, and the Fed's benchmark interest rate, with markets typically focused on the median readings.

Investors ahead of this week's meeting anticipated the Fed would approve two quarter-percentage-point rate cuts by the end of this year, lowering the overnight interest rate to the 3.75%-4.00% range. While that expectation matches what Fed officials themselves anticipated as of December, the situation has become more complex.

The full scope of Trump's plans still isn't certain. The bulk of the promised tariffs, expected to land heavily on Mexico and Canada, the globally integrated auto industry, and indeed much of the rest of the world, is still in formation.

And there are pressing debates ahead about the federal debt ceiling, Trump's desire to extend major tax cuts from his first term in the White House, and legal challenges to many of the things he has set in motion.

HARD CHOICES

Fed officials may not speak to any of those policy areas directly. They have been careful to frame their debate around inflation and unemployment — the core issues of monetary policy — and not, as Powell said in his post-meeting January 29 press conference, "to criticize or praise" administration policies.

But the policymakers' projections on Wednesday may show shifts in perceived uncertainty and risk since December. Indeed, the language of some of them has begun to change as well, with references to the hard choices that may lie ahead if Trump's tariff plans begin to raise prices as the economy slows and unemployment rises.

The Fed "is likely more concerned about administration policy than it is willing to admit," said Steve Englander, head of macro research for North America at Standard Chartered.