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A Preview to the Fed Decision Today

“Here’s what to look for when the Federal Open Market Committee releases its policy statement at 2 p.m. today inWashington. Federal Reserve officials won’t provide new economic projections, and Chair Janet Yellen isn’t scheduled to give a post-meeting press conference.

— Steady tapering: The FOMC will probably trim monthly bond purchases for a sixth straight meeting, to $25 billion, said Joseph LaVorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York. That would keep the Fed on pace to announce an end to purchases in October, he said.

— Labor slack: At the same time, the panel will discuss signs of persistent labor-market weakness to maintain its view that interest rates should stay low for a “considerable time” after quantitative easing ends, according to Jonathan Wright, an economics professor at Johns Hopkins University in Baltimore.

— While the jobless rate is down to 6.1 percent, that’s partly because the proportion of working age people in the labor force is the lowest since 1978. “Unemployment is falling faster than expected, but they can still say that other labor-market indicators are mixed,” said Wright, an economist at the Fed’s division of monetary affairs from 2004 until 2008.

— Lagging wages: The FOMC’s most vocal supporters of continued stimulus will probably also cite weak wages, said Michael Feroli, chief U.S. economist at JPMorgan Chase & Co. in New York.

The FOMC wants “clear evidence of firming wage inflation” before determining that the U.S. is approaching full employment, LaVorgna said in a note to clients. After adjusting for inflation, average hourly earnings last month fell 0.1 percent from a year earlier.

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