The global economy has stumbled, and financial markets have endured some stomach-churning moments. But that doesn't mean the Federal Reserve plans any major policy shifts.
Ending a two-day discussion Wednesday, the Fed is expected to announce the end of its monthly bond buying program. It's also expected to signal that it remains in no hurry to raise its key short-term interest rate.
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The discussions will conclude with a statement on the Fed's decisions. This month's events will not include a news conference by Chair Janet Yellen, whose next session with reporters will be in December. That's one reason most economists don't think the Fed will announce any major policy shifts until its next meeting, when Yellen would be able to explain any changes.
The economy the Fed is discussing has been strengthening, thanks to solid consumer and business spending, manufacturing growth and a surge in hiring that's reduced the unemployment rate to a six-year low of 5.9 percent. Still, the housing industry is still struggling, and global weakness poses a potential threat to U.S. growth.
Yellen has stressed that while the unemployment rate is close to a historically normal level, other gauges of the job market remain a concern. These include stagnant pay; many part-time workers who can't find full-time jobs; and a historically high number of people who have given up looking for a job and are no longer counted as unemployed.
What's more, inflation remains so low it isn't even reaching the Fed's long-term target rate of 2 percent. When inflation is excessively low, people sometimes delay purchases — a trend that slows consumer spending, the economy's main fuel. The low short-term rates the Fed has engineered are intended, in part, to lift inflation.
In its statement, the Fed is expected to repeat a phrase that has buoyed investor hopes for continued low rates: That it expects to keep its benchmark rate at a record low near zero "for a considerable time." That rate has been near zero since December 2008.
When the Fed last met six weeks ago, record stock prices and healthy hiring growth had raised investor concerns that the Fed might scrap its "considerable time" language. Then Europe's renewed weakness deepened worries about the global economy and about whether a deflationary spiral that's plagued Japan for two decades could spread internationally. Financial markets tumbled.
Stocks have since regained nearly all their lost ground. Yet the concerns about deflation and a weaker Europe have made clear that the central bank is increasingly looking beyond the United States.
"The Fed needs to consider the international situation," said Sung Won Sohn, an economics professor at the Martin Smith School of Business at California State University. "The global economy is very soft, and Europe is on the verge of relapsing into recession."
If the Fed dropped the "considerable time" language, it would likely seek to reassure markets that the timing of any rate increase would depend on strengthening economic data. Minutes of the September meeting showed that Fed officials were concerned that simply dropping that phrase might be misinterpreted as a shift in the Fed's stance on rates.
The bond buying program the Fed is expected to end has been intended to reduce long-term rates. The Fed has pared its purchases from an initial $85 billion a month last year to $15 billion. In September, the Fed said it expected to end them altogether after the October meeting.
Even when it does, the Fed will be left with a record investment portfolio of nearly $4.5 trillion, which will still exert downward force on long-term rates. In September, the Fed said it planned to keep reinvesting its holdings and, when it does begin to reduce its balance sheet, to do so in a "gradual and predictable manner."
Yet investors are expected to remain on high alert for the first hint that rates are set to move higher.
"Given that the Fed has kept interest rates low for so long and artificially boosted asset prices such as stocks for so long, a period of instability is inevitable," said David Jones, author of a new book on the Fed's first 100 years.
Most economists have said they think the Fed will start raising rates by mid-2015. But the global economic weakness, market turmoil and falling inflation forecasts have led some to suggest that the Fed might now wait longer.
Diane Swonk, chief economist at Mesirow Financial, thinks the Fed will keep rates near zero until September and that when it does raise them, the increases will be incremental.
"The operative word will be gradual," Swonk said. "The Fed is getting close to their goal on employment, but they are still missing the target on inflation and they will want to address that."