Jerome Powell, Chairman of the Federal Reserve, speaking at the New York Economic Club on Nov. 28th, 2018. Adam Jeffery | CNBC

The Federal Reserve is expected to leave interest rates unchanged at its meeting this week, and Federal Reserve chairman Jerome Powell is expected to go out of his way to not rock financial markets. Powell has made some unfortunate missteps that have caused violent market reactions. Some Fed watchers expect he will tiptoe through his press briefing Wednesday afternoon, trying not to say anything that would change the Fed's message that it is patient and not in a rush to raise rates. The Fed's two-day meeting begins Tuesday, and it will end with a 2 p.m. ET statement Wednesday followed by a press briefing by Powell. "I'm betting this is a press conference he'd rather not have. It's all risk, no return," said Ethan Harris, head of global economics at Bank of America Merrill Lynch. "They've calmed the markets." Harris said Powell and other Fed officials have successfully pushed back against criticism that they were ignoring the warning from the markets about economic weakness. "They made it clear they do pay attention to the markets and business leaders, and they're not just fixated on hard data," said Harris. At the briefing after the December meeting, Powell described the Fed's program to wind down its balance sheet as being on "autopilot." That comment unnerved investors, and Powell took pains to explain several weeks later that the program was set up to run int the background as the Fed used its rate policy as its foremost tool.

'Prudence, patience and good judgement'

But Powell also said the balance sheet would be "substantially smaller" than it is now when the Fed is done. Since then, news reports indicate the Fed could be in the process of considering ending its program sooner than it had expected. The Fed reduces the balance sheet by no longer replacing a portion of the Treasury securities and mortgages, as they mature. Powell had another run in with markets when he said in early October that the Fed was far from a neutral rate, a comment that triggered a swift run up in interest rates and a decline in stocks. He also had to back down from that comment, which suggested the Fed had to raise interest rates much more in the current cycle. Fed officials have spent weeks wooing markets, making it clear they will be watching economic reports and go slow when it comes to raising rates. New York Fed President John Williams was one of those and in mid-January, he explained that the Fed has now transitioned from a period in 2018 when the economy was growing above trend and gradually raising interest rates was necessary. "Twelve months later, the tailwinds have lost their gust, interest rates are closer to normal levels, and inflation is tame. The approach we need is one of prudence, patience and good judgment. The motto of 'data dependence' is more relevant than ever," he said. So now, Powell and the Fed's statement are expected to echo those and other comments. "I think that the Fed has pretty much finished the pivot. They went form being hawkish sounding and focusing on baseline forecasts to admitting they're uncertain about the outlook and now being very flexible about the policy moves," Harris said.

Three things the markets want