The Federal Reserve's Federal Open Market Committee began its one-day meeting on Tuesday, and analysts expect that policy makers will not stray from their commitment to keeping interest rates accommodative at near-zero levels.
Analysts don't expect the FOMC to start tightening policy until a change in the economic forecast gives them a reason to do so, which they say probably won't happen until the second half of the year, possibly in the fall.
However, some say a change in the language of the Fed's commitment to keeping rates low for an "extended period" could come during the next few meetings.
"Before then, it will want to loosen up the commitment associated with an "extended period" of a zero funds rate," former FOMC secretary and economist Vincent Reinhart told RTTNews. "At the end of 2003, the FOMC switched from holding the level of the funds rate low for a "considerable period" to promising it will be "patient" in removing accommodation."
He added, "I think the FOMC will do something similar in the next three meetings, but not likely this one."
Analysts will be keeping an eye on which members of the committee vote against the accommodative policy. Kansas City Fed chief Thomas Hoenig, a member of the committee, has said that an extended period of the low federal funds rate is no longer warranted.
However, while the economy has been showing signs of positive growth - such as gains in retail sales - many other Fed officials, including chairman Ben Bernanke, have said that recovery will continue to be subdued.
The Fed is expected to confirm the end of its purchases of mortgage backed securities, which are set to expire this month. The central bank has had opportunities to extend the program in recent months, but has not.
"They will probably confirm the end of the program but signal they are monitoring markets carefully," Reinhart said.
The meeting comes on the heels of recent announcements that Fed vice chairman Donald Kohn will be stepping down when his term ends in June. San Francisco Fed president Janet Yellen is believed to be President Barack Obama's top choice to replace Kohn.
The Fed will release a statement after the meeting at around 2:15 p.m.
The one-day meeting will be the first in eighteen months for the FOMC. Policy makers have been holding two-day sessions since the onset of the worst financial crisis in decades in September 2008.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.