The Federal Reserve building in Washington. (Kevin Lamarque/Reuters)

Update: Read about the Fed's action here.

The Federal Reserve is expected to leave its influential interest rate unchanged after the central bank’s top officials wrap up their meeting in Washington today, following a rocky start to the year in the financial markets that is forcing them to reevaluate their plans.

The Fed raised its benchmark interest rate in December from near zero to a range of 0.25 to 0.50 percent -- the first increase in nearly a decade. The move amounted to a vote of confidence in the nation’s economic recovery, and officials at the time indicated they anticipated hiking four more times this year.

Many investors had expected the next increase would happen at this meeting. But global financial markets hit the skids as the year began. The U.S. dollar remained strong, weighing on American exports and holding down the cost of imports. And oil prices plumbed decade-old lows, further restraining inflation. That has prompted investors and economists to predict the Fed will stay its hand today.

The Fed “is likely to extend its current period of ‘watchful waiting’ by foregoing a rate hike at this week's policy meeting,” said Kevin Logan, chief U.S. economist at HSBC.

U.S. stock markets opened slightly down Wednesday, with the Standard & Poor's 500-stock index and the Dow Jones industrial average both off 0.1 percent in trading at midday.

Investors will be focused on the tone of the central bank’s official statement and its updated outlook for the economy. At its last meeting in January, the Fed abstained from assessing the amount of risk facing the recovery. Since then, central bank officials have openly debated how resilient the economy might be.

The Fed is charged with two main goals: fostering maximum employment and keeping prices stable. The U.S. job market has been remained strong despite the global financial turmoil, with recent data showing robust hiring and rising participation in the labor force. In addition, oil prices seem to have stabilized, and there are early signs that inflation is finally beginning to rise toward the Fed’s target of 2 percent after years of missing the mark.

“We may well at present be seeing the first stirrings of an increase in the inflation rate--something that we would like to happen,” Fed Vice Chair Stanley Fischer said last week.

Other officials are more cautious, however. In a speech last month, New York Fed President William Dudley said he felt the risks to the economy “may be starting to tilt slightly to the downside.” The sentiment was echoed by Fed Gov. Lael Brainard last week, arguing that the recovery should not be taken for granted.

“It is critical to carefully protect and preserve the progress we have made here at home through prudent adjustments to the policy path. Tighter financial conditions and softer inflation expectations may pose risks to the downside for inflation and domestic activity,” she said. “From a risk-management perspective, this argues for patience as the outlook becomes clearer.”

The Fed has not provided formal guidance on when it will raise interest rates again. Officials have repeatedly emphasize that their decision will depend on the economic data. If the recovery progresses more rapidly than expected, the Fed may act more quickly. If the economy falters, the central bank can pause -- as it is expected to do today.

But the debate among officials underscores the fact that data can be subject to interpretation, and the outlook is currently particularly uncertain. On Tuesday, investors considered it essentially a tossup whether the Fed would raise rates again at its meeting in June.

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