The Fed will announce its latest interest rate decision on Wednesday. Here’s what to expect

The Federal Reserve has little choice but to stay on the sidelines this week as it navigates the mix of complex and conflicting forces at play in the U.S. economy.

Markets are pricing in zero chance of a rate-setting Federal Open Market Committee cut at this meeting — or any in the near future. Price futures suggest policymakers won’t consider easing until at least September, October, and even then a single cut this year.

For Wednesday’s decision, President Jerome Powell and his colleagues will have to contend with mixed signals from the Iran war, a spike in inflation and the labor market. A combination of factors gives hope that the Fed will stay pat, targeting its key interest rate between 3.5% to 3.75%. Updates to economic and rate projections are also not expected to show major changes.

“The decision is almost guaranteed – to hold rates at the March meeting. But any clues about the path of future interest rates will be important to Chair Powell,” said Beechen Lin, senior investment strategist at Russell Investments. “Broadly speaking, the US economy is still on solid footing. This means the bar for further rate cuts in the US may be quite high.”

Even before the war, traders had not expected a cut at this week’s meeting. Instead, they expect the FOMC to wait until June, then cut at least once before the end of the year, according to CME Group’s FedWatch pricing.

However, the attacks — and their impact on oil and inflation — have changed the market’s calculus, although Fed officials often see through the oil shocks that accompany the fight.

As such, all eyes will be on Powell’s message. If things go as planned, this will be Powell’s next-to-last meeting as chairman, so markets may be wary of reading too much into the chair’s remarks.

“The April cut is almost entirely priced in, with Powell’s ability to guide markets dependent on the extent to which he is perceived to represent the committee’s consensus rather than his own views,” Bank of America Fed-watchers said in a note. “Even if this restriction is set aside, Powell will have his work cut out for him.”

Former Fed Vice Chairman Roger Ferguson told CNBC that the committee expects “the environment” in a post-meeting statement as inflation, unemployment, economic growth and the expected path of policy dictate.

“The question on everyone’s mind is what they say about the future and how they think about changing the balance of risks,” he said.

In weighing the labor market against inflation, Ferguson said he wants the Fed to focus on prices.

“I’m more worried about higher inflation. You know, the Fed has a 2% target. They’ve been away from that target for many years now,” he said. “At some point, it starts to come into question whether the 2% target is really the Fed’s target or not, so I’m more concerned about that.”

Investors will get a deeper look at the committee’s thinking when updates to the summary of economic projections are released. Within that release is the Fed’s closely watched “dot plot” grid of individual officials’ interest rate expectations.

However, most observers expect few changes in the SEP or dot plot: The Fed may push economic growth and inflation slightly since the last update in December, but the rate outlook is expected to remain largely unchanged. Officials indicated in December that they would see just one cut this year, and the consensus is painted to hold even with disagreements over recent Fed decisions.

“Looking at their communications, they emphasize that the conflict in the Middle East has added further uncertainty to the outlook for both inflation and employment. However, their forecasts are remarkably similar to three months ago,” wrote David Kelly, chief global strategist at JPMorgan Asset Management.

On top of all that, there are lingering political winds over the Fed.

President Donald Trump has been urging the central bank, and Powell in particular, to cut rates for years. Appearing before members of the media on Monday, Trump again lashed out at the chair, saying Powell should have called a special meeting.

“What better time to cut interest rates than today? A third grader would know that,” Trump said.

However, Trump’s own Justice Department is holding out to replace Powell.

Kevin Warsh’s nomination to succeed Powell in May has been held up by US Attorney Jeanine Pirro’s ongoing case against Powell over the renovation of the Fed’s headquarters. Until that is resolved, Sen. Warsh will block the Senate Banking Committee nomination. Thom Tillis, RN.C.