According to MarketWatch, the US financial website, the Fed does not want to leave any doubt: the US central bank is still planning to raise interest rates again this year and begin to scale back its large portfolio of Treasury and mortgage-related bonds.

The Fed also plans to do so at the right time.

All of this is likely to make progress this week. This week, Federal Reserve Chairman Yellen and other senior Fed officials will meet in Washington to map out the policy path for the rest of 2017. They may adjust their previous assessment of inflation, but the main policy path will not change. Recently, inflation has shown a sharp downward trend.

The U.S. Open Market Committee (FOMC) will make a decision at 2 p.m. eastern time on Wednesday (2 a.m. Beijing time on Thursday).

"Federal Reserve Chairman Yellen and other Fed officials will tell the market that they will still tighten monetary policy, but in a moderate and predictable manner." Said Gregory Daco, head of US economics at the Oxford Institute of Economics (Oxford Economics).

The following four points need to be paid attention to at this Fed's monetary policy meeting:

1. It is only possible to "normalize the balance sheet"

In May, the Fed said it would gradually shrink its $4.5 trillion balance sheet later this year. During the Great Recession, the Fed sharply increased its bond holdings to keep interest rates very low and stabilize the US economy in freefall decline.

Although the Fed is likely to change its statement in its official statement in July that the process of reducing the balance sheet will begin at a fairly fast pace, but the US central bank is not expected to announce the start of balance sheet normalization at this meeting. The process of starting the shrinking table should be started in September at the earliest. " Economists say.

Wall Street expects the Fed to start shrinking its balance sheet this fall.

The Fed has made great efforts to lay the groundwork for the smooth start of the process of reducing its balance sheet. For the time to open the shrinking table, they can't take the risk, because it will frighten the market. " Said Lou Crandall, chief economist at Wrightson ICAP, a Leiden bond market research firm.

2. What will be the process of raising interest rates?

The Fed is still in the process of raising interest rates and will raise its benchmark short-term interest rate again this year-there is no reason to think about it. Us interest rates, a tool the Fed uses to determine the cost of corporate and consumer borrowing in the United States, are now in the range of 1% to 1.25.

However, the Fed does not want to continue to raise interest rates while shrinking its balance sheet. The Fed is expected to adopt vague language on the timing of the next rate hike. Investors are now almost certain that the Fed will not raise interest rates again until December.

3. What kind of inflation?

A few months ago, Federal Reserve Chairman Yellen reprimanded the brief drop in prices caused by the expiration of patents on radiotelephone programs and prescription drugs, which led to an unexpected reversal in inflation. For the fed's most valued price indicator of personal consumption expenditure, the annualised inflation rate fell to 1.4% in may and hit a five-year high of 2.1% year-on-year in February.

The Fed has set an inflation target of 2%.

Although Federal Reserve Chairman Yellen and her Fed colleagues think inflation will rebound again, they now seem less sure. The federal open market committee is expected to stick to its 2% target for inflation, but they may also know that it will take longer than they thought to reach the inflation target.

The Fed may also confirm that inflation will fall further, analysts at Goldman Sachs said.

4. American economy

Fed officials are generally optimistic about the health of the U. S. economy. They are likely to discuss the improvement in employment and stronger economic growth since the spring, but they will also acknowledge that consumer spending has been weaker to some extent.

One of the big mysteries facing the Fed is that although the unemployment rate is at a 16-year low, wage growth for American workers is still being curbed. Yellen believes that a tighter labor market will push up wages and overall inflation, but there is not much evidence that this is the case.

So far, we have seen a little of this happening, but the scope is not widespread, Mr Dako said. (Lin Xue)