Everything You Need To Know Before Today's Fed Announcement

At 2 p.m. this afternoon, the Federal Open Market Committee will release its economic projections for the upcoming two years. More importantly, the central bank will announce whether or not it will move to raise interest rates this month and likely hint at the timing of future increases.

Short-term interest rates have sat near zero for nearly a decade.

Here's what you need to know ahead of today's announcements.

The Latest Dot Plot Projections

The most recent dot plot projections from the Fed, published in March, indicated a median federal funds rate of about 0.5 percent by the end of 2015. The report predicted a 2 percent rate by the close of 2016, upwards of 3 percent by the end of 2017, and a long-term rate of about 3.75.

The federal funds rate is the interest rate at which a depository institution lends funds maintained at the Federal Reserve to another depository institution overnight and is an indicator of interest rates in the overall economy.

Although the March data says nothing about the Fed's action today, it does hint at the the Fed's actions in coming months, which will likely be the main topic of discussion this afternoon.

This Week's Data

According to Tim Anderson, this week's economic data could aid those within the Fed looking to postpone an interest rate hike. With both the Empire State Manufacturing Report and industrial production figures coming in as misses, he says there is a new pool of evidence suggesting that the economy isn't recovering as strongly as some may have thought.

Anderson is "almost 1,000 percent [certain]" that we won't see a rate hike today.

Failing On Two Fronts

Adam Sarhan, CEO of Sarhan Capital, says that the Fed is currently failing on both components of its dual mandate: 1) maintaining two percent annual inflation and 2) fostering economic growth. If the Fed is unable to meet these goals with interest rates near zero, he is skeptical that it will be able to do so under tighter monetary policy.

What Will Yellen Say?

Joe Brusuelas, Chief Economist at McGladrey LLP, believes that Federal Reserve Chairwoman Janet Yellen will try to assuage investors' fears as the FOMC is likely to release slightly worsened economic projection. He is looking for her to "[reinforce] the lower for longer mantra" and assure observers that "the pace, not the timing, of hikes is the key."

According to Brusuelas, Yellen will try to mitigate any negative effects that Fed statements could have on markets.