The Federal Reserve is expected to keep interest rates steady Wednesday despite growing concerns about the strength of the U.S. economy.

Measures of economic confidence spanning consumers, households and small businesses have taken a dive in recent weeks, and some performance projections are starting to follow suit.

The Organization for Economic Cooperation and Development (OECD) revised its 2025 outlook for the U.S. on Monday to 2.2-percent annual growth, down from 2.4 percent in December. Projected output for 2026 was knocked back to 1.6-percent growth from 2.1 percent.

Dips in sentiment do not guarantee that conditions will actually get worse, but they can be a sign of slower economic times ahead. The Fed will need to manage the narrative on the economy this week in addition to economic conditions themselves, especially with the bank set to release new projections on the economy.

Here are five questions facing the Fed ahead of its March policy decision.

What signals does the Fed give about future rate cuts?

The Fed is in the middle of a pause on its interest rate cuts, and markets fully expect the central bank to hold interbank lending rates steady this week at a range of 4.25 to 4.5 percent.

The Fed’s January pause followed three rate cuts over the fourth quarter of last year that bookended a year of elevated rates prompted by the pandemic inflation. The Fed pumped the brakes on cuts after inflation crept up again during the fall and unemployment levels remained low after popping up over the summer.

The Fed has stressed its “data dependency” over this period as it has tried to stick its desired soft landing — bringing inflation down to its target rate of an annual 2-percent increase without causing a recession and throwing large numbers of people out of work.

“We’re not on any preset course,” Fed Chair Jerome Powell said in January. “The Committee will assess incoming data, the evolving outlook and the balance of risks.”

However, as darkening sentiment related to President Trump’s trade war adds another variable........

© The Hill