Here comes the Fed...
Following a two-day meeting in Washington DC, traders see a zero percent likelihood that the Fed's statement would show a decision to raise interest rates, according to Bloomberg's World Interest Rate Probability.
The Fed raised its benchmark interest rate last month for the third time this year, signaling it believed the economy was strong enough to withstand higher borrowing costs.
Instead of the level of interest rates, markets will on Wednesday be focused on the Fed's next big task: paring down the $4.5 trillion balance sheet it built by buying Treasurys and other assets after the financial crisis to steady borrowing costs.
"I get the sense that people are diminishing how big it really is," according to Seema Shah, the global investment strategist at Principal Global Investors, which manages about $420 billion in assets. Amid uncertainty about the impact that the process would have on markets, "there should be more caution and a following of every single indicator as we approach that point and once it starts," she told Business Insider.
Minutes of the Fed's June meeting showed that officials were divided over when the process should begin. While some preferred to spell out that it would start "within a couple of months," others thought communicating too soon would signal that the Fed was getting much more aggressive with removing recession-era support systems.
The other big point of focus in Wednesday's statement is the Fed's view on inflation, which has fallen further away from the central bank's 2% target for four straight months.
Fed Chair Janet Yellen said in Congress last week that developments are being watched closely. She previously indicated that temporary factors like cheaper cellphone plans and prescription drugs were behind the inflation slowdown.