The Federal Reserve kept its policy rate unchanged on Wednesday but sharply ramped up its expectations for economic growth — while affirming that it does not plan to raise interest rates until 2023. The central bank also curiously reworded the public statement accompanying its decision.

Why it matters: U.S. inflation expectations have shot up in recent months while unemployment remains historically high, making guidance on the Fed's next steps particularly important.

What they're saying: "The COVID-19 pandemic is causing tremendous human and economic hardship across the United States and around the world. Following a moderation in the pace of the recovery, indicators of economic activity and employment have turned up recently, although the sectors most adversely affected by the pandemic remain weak. Inflation continues to run below 2 percent."

What it means: The Fed looks to be trying to have it both ways — acknowledging the economic recovery while also insisting that interest rates need to be kept low to assist it.

• The Fed's policymaking committee also voted to continue its quantitative easing program in which the central bank buys at least $120 billion of bonds a month.

What to watch: Inflation worries have taken center stage among investors, with a recent survey from Bank of America showing that it has displaced the coronavirus pandemic as the top concern among global fund managers.

• Consumers also have shown increasing worries, with inflation expectations rising to their highest level in seven years, according to the New York Fed.
• Google searches for inflation have jumped to their highest since record-keeping began in 2008, according to data from Deutsche Bank.

The bottom line: Powell has generally brushed off concerns about inflation, saying the Fed has the tools to tamp down inflation should it materialize.