That creates the possibility of a surprise, and economists put 20% odds that the FOMC will decide not to cut Wednesday. Any pause would also certainly be opposed by President Donald Trump, who’s pushed publicly for lower rates to rev up the economy.

“This meeting will be very contentious,’’ said Jonathan Wright, economics professor at Johns Hopkins University in Baltimore, who previously worked at the Fed. “The overall data since the last meeting aren’t that negative, and a lot of FOMC participants, mostly nonvoting, will be unconvinced of the wisdom of cutting again.’’

Done Enough?
The last time the Fed reduced rates three times while the economy was growing was in 1998. After the third cut, it sent a strong signal it was done, announcing that financial conditions following 75 basis points of easing “can reasonably be expected” to sustain the expansion.

Wednesday’s statement might also suggest “we have done enough,’’ said Stephen Stanley, Amherst Pierpont chief economist. “If they ease and want to send a pause signal, it will be up to Powell to flesh it out.’’

The FOMC may consider tweaking its assessment of current conditions to slightly weaker wording, noting that the job creation has eased and inflation expectations have moderated, said Lindsey Piegza, chief economist with Stifel Nicolaus in Chicago.

One concern Fed officials may have with too strong of a pause signal is that it could flatten the Treasury yield curve, and an inverted yield curve -- where short term rates are higher than long-term ones -- is traditionally viewed as a recession warning that could alarm investors.

Fed Resolve
“The market is likely to increasingly question the Fed’s resolve to prop up a faltering economy which could translate into lower rates on the longer end, perpetuating the need for further Fed action to stabilize the shape of the yield curve,’’ she said.

The central bank was not seen making much news on its balance sheet following an Oct. 11 announcement it would buy Treasury bills at an initial $60 billion a month pace to lift bank reserves in the system. The Fed has repeatedly called the measure, undertaken after sharp spikes in overnight money market rates, a technical step that did not alter the stance of monetary policy.

This article was provided by Bloomberg News.

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