The central bank is widely expected to cut interest rates by 25 basis points at the conclusion of a two-day meeting on Wednesday.

While Wednesday’s rate cut appears to be largely priced in by markets, especially considering recent gains in Wall Street, focus will be chiefly on the central bank’s outlook on rates.

Investors are bracing for the Fed to signal a slower pace of easing in 2025 amid growing signs of sticky inflation and strength in the labor market- two major points of contention for the Fed.

Goldman Sachs analysts said in a recent note that they no longer expect a rate cut in January, and that the bank will cut rates by a slightly slower pace in the coming year. 

Traders were seen pricing in a 81.9% chance the Fed will leave rates unchanged in January, CME Fedwatch showed. 

Beyond the Fed, the focus this week is also on retail sales, due later Tuesday, and industrial production data.