(Bloomberg) -- The Federal Reserve will offer its take on the risks of another rate hike during global uncertainty or leaving rates alone until the U.S. economy promises to improve.

Federal Reserve Chairwoman Janet Yellen has been mum on the possibility of a rate hike.
Federal Reserve Chairwoman Janet Yellen has been mum on the possibility of a rate hike.

Minutes of the Federal Open Market Committee’s April meeting will be released Wednesday. Several regional Fed presidents said last week that a move could be possible in June or July, though there’s been no recent public comment from Chairwoman Janet Yellen or her number two, Stanley Fischer. Yellen will speak at Harvard University on May 27 and Fischer delivers remarks Thursday in New York.

Investors see less than a 23 percent chance the Fed will hike at either of its next two meetings, according to pricing in federal funds futures. The minutes could show how many policy makers wanted to get on with rate increases, versus those arguing for caution. It may also unpack the debate around the risks to the U.S. and global economic outlook.

“The April FOMC statement was an attempt by the committee to balance out the odds of a June move a little bit,” said Stephen Stanley, chief economist at Amherst Pierpont Securities in New York. “They weren’t ready to say they wanted to go in June, but they felt like the odds priced in June were too low.”

GLOBAL OUTLOOK
At the conclusion of its April meeting in Washington, the FOMC left its benchmark rate unchanged, but updated its policy statement by removing a reference to "global economic and financial developments" as an ongoing risk. There was no press conference following that meeting.

The FOMC has held its target range for the federal funds rate unchanged at 0.25% to 0.5% since lifting it in December for the first time in nearly a decade. Officials in March forecast they would raise rates twice this year but investors see only one move.

One reason for this skepticism is the mixed readings on the U.S. economy so far in 2016, with ups and downs in consumer spending despite steady job creation while the Fed’s preferred gauge for inflation remains under its 2% target, though it may be beginning to build. Consumer prices, which the Fed doesn’t target, increased 0.4% in April compared to the month before, Labor Department data showed on Tuesday, registering the largest gain in three years.

Financial markets have also been volatile, especially in the first three months of the year, as global growth forecasts were cut.
Fed officials next gather in June, a little more than a week before Britain holds a referendum on European Union membership. A vote on June 23 for the U.K. to leave could renew financial market tensions.

In its April statement, the FOMC also stopped short of offering an assessment of the balance of risks to the outlook, an ongoing feature of post-meeting announcements that was ditched in January as global economic uncertainties increased.

“What we may receive is just more color on the decision not to put in a balance-of-risks assessment,” said Dean Maki, chief economist at Point72 Asset Management in Stamford, Conn. It could be that there was too much disagreement on the likely persistence of the apparent slowdown in the first quarter, or concern about sparking market turmoil by sending a strong signal about imminent rate hikes, he said.

CALMER MARKETS
The minutes will probably show that officials were relieved by calmer markets in recent months, which have led to a more-supportive financial backdrop. Fed Governor Lael Brainard called the development “welcome” in a recent Bloomberg interview, while adding the caveat that “global risks could re-emerge for a variety of reasons.”

Still, officials didn’t have a very clear picture of the domestic economy when they met in April, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities in New York.

“How troubled they were by growth, or that they were expecting weak growth not to persist -- to the extent there is uncertainty there, it would make them less likely to move,” he said.

Recent reports have showed that the slowdown in the first quarter doesn’t seem to be carrying over to the second. Advance estimates of retail sales were strong in April and February and March sales were revised up, according to data released by the Commerce Department on May 13 in Washington.

U.S. unemployment is holding steady at 5%, and the Fed’s preferred measure of inflation has been under its 2% target since 2012.
“Domestically things are just sort of OK, and it certainly doesn’t feel like the domestic situation should be causing any urgency,” said Aneta Markowska, chief U.S. economist at Societe Generale in New York. “I don’t think a June hike is on the table. The markets are just not priced for it.”

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