No change in Fed policy is expected. The target rate will remain at 5.50% and the policy statement may not alter that much from January. Markets will be sensitive to the refreshed dot plot and economic projections, however, and will pay close attention to Chairman Powell’s press conference for guidance on the rate outlook. 

Despite sticky inflation data, policymakers may not have enough information at hand to revise their outlook significantly; there may be some marginal changes to the dot plot but it may still reflect a median decline of 75 bps in the target rate this year. 

Any modest revisions to the inflation outlook (higher) could be offset by revisions to growth and jobs (weaker). 

Markets are wary of the Fed sounding hawkish in some form so positioning/sentiment will be vulnerable to an outcome that leans neutral and sounds a bit dovish relative to expectations.