The U.S. Federal Reserve on Wednesday is expected to hold interest rates steady, shave the number of hikes projected for the rest of the year, and release long-awaited details of a plan to end the monthly reduction of its massive balance sheet. The U.S. central bank since early this year has signaled a "patient" approach to increasing borrowing costs, drawing an end to a gradual, three-year cycle of monetary tightening marked by nine rate hikes, including seven during the 2017-2018 period. Investors now put a 75 percent probability on the likelihood the Fed won't raise its overnight benchmark interest rate, or federal funds rate, any more this year, according to CME Group's FedWatch tool. The fed funds rate is currently set in a range of 2.25 percent to 2.50 percent. New quarterly economic and rate projections to be released with the latest Fed policy statement at 2 p.m. EDT (1800 GMT) will show how closely policymakers align with that view. The Fed's December projection called for two hikes this year, but that is widely expected to be cut to a single increase at the conclusion of the two-day policy meeting on Wednesday.

Federal Reserve Chair Jerome Powell testifies during a Senate Banking Committee hearing in Dirksen Building titled 'The Semiannual Monetary Policy Report to the Congress,' on February 26, 2019. Tom Williams | CQ-Roll Call Group | Getty Images

It would take a downward move by seven policymakers to bring the median expected number of hikes to zero for the year, a full half-percentage-point change that has happened only once since the Fed began making its "dot plot" of projections public in 2012. The more intense focus among investors may be on the balance sheet, and the Fed's plans to stop reducing its holdings of Treasury bonds and mortgage-backed securities each month by as much as $50 billion. Details of that plan are also expected to be released on Wednesday, providing investors with a sense of how much longer the drawdown will continue, and what will likely be left in the Fed's portfolio of assets when it stops. Minutes of the Fed's policy meeting in late January showed officials wanted "to announce before too long a plan to stop reducing ... asset holdings later this year," a statement many have construed to mean an endgame for the balance sheet would be revealed this week. Fed Chairman Jerome Powell is due to hold a press conference half an hour after the release of the policy statement.

Steady reduction