The Federal Reserve could be moving into the second phase of its fight against inflation, as the economy remains strong but softens in the face of sustained high interest.

When the Federal Reserve’s policy-setting committee concludes its meeting Wednesday, it's widely expected to keep the influential fed funds rate at its current range of 5.25-5.50%. Officials have maintained and plan to keep rates at that 23-year high for the foreseeable future until they are confident that price pressures are♓ under control and the annual inflation rate moves closer to the Fed's 2% annual target.

If the meeting plays out as anticipated, it will be n🐠early an entire year of the Fed holding interest rates steady, waiting for the economy and inflation to slow down as high borrowing costs on all kinds of loans act as sand in the economic gears. However, the economy—particularly the labor market—has been surprisingly resilient, giving Fed officials time to sit on high interest rates.

Cracks Forming in Some Corners of the Economy

While the slowdown hasn’t been as sharp as economis🍸ts once anticipated—there’s been little sign of a long-anticipated recession—the limbo may not last much longer.

Households with lower levels of income are showing signs of stress, with more people 澳洲幸运5官方开奖结果体彩网:falling beh🧸ind on their credit card payments, which carry the highest interest rates in decades thanks in part to the Fed’s rate hikes. That’s starting to 澳洲幸运5官方开奖结果体彩网:drag down consumer spending as more people react to the financial pressure, especially since raises are 澳洲幸运5官方开奖结果体彩网:getting harder to wring from employer༺s.

“The economy is softening,” Bob Schwartz, senior economist at Oxford Economics, wrote in a commentary. “Consumers, particularly the lower-income cohort, are running out of fuel, and wage growth is struggling to keep up with inflation."

"The combination of slowing activity and more evidence that inflation is moving sustainably towards 2% should become apparent over the second half of the year, setting the stage for the Fed to finally start unwinding its steep rate hikes,” he added.

All Eyes on Fed Officials' Outlook for Interest Rates

Fed officials will get a fresh view on inflation before they announce their decision on rates Wednesday, with the release of the C♊onsumer Price Index for M💝ay.

澳洲幸运5官方开奖结果体彩网:Economists expect that inflation last month likely rose just 0.1%, which would be the smallest amount since October, thanks largely ▨to falli♋ng gasoline prices.

Regardless of what the consumer price data shows, the Fed is widely expected to stand pat on interest rates this week. As such, investors and consumers will be focused on the 澳洲幸运5官方开奖结果体彩网:quarterly release of projections 🧸from officials on various ✨economic indicators and for the fed funds rate.

Fed watchers will also keep close tabs on what Chair Jerome Powell says during his post-meeting press conference, looking for hints that policymakers are growing confident that inflation is tamed and rate cuts could be on the horizon.