Markets will be laser focused on Federal Reserve policy and economic projections next week, looking for signs about where interest rates are heading. Unfortunately, policymakers, led by Chair Jerome Powell, face a backdrop unlike any they’ve confronted before, and it’s likely to leave them as confused as the rest of us.

New inflation data published this week suggest the core personal consumption expenditures deflator — the price gauge that is most closely watched by Wall Street for monetary policy implications — probably remained too high for comfort in February. With most inputs in hand, Bank of America Corp. economists estimate that core PCE increased 0.3% in the month (a 2.7% rise on a year-over-year basis), with some risk that the final number could round to 0.4%. That’s too high for the Fed to consider cutting rates, despite deteriorating sentiment and market worries about a broad economic slowdown.

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