Federal Reserve officials are scheduled to meet Jan. 27 and 28 to set the nation's monetary policy.

Financial markets expect the Fed to hold interest rates steady at the January meeting.

More attention may be paid to the press conference following the interest rate decision. Chair Jerome Powell will likely be asked about the Federal Reserve's future.

The Federal Reserve's policy committee meets tomorrow and Wednesday, and officials are expected to hold the central bank's key interest rate steady after a series of cuts in recent months.

The Federal Open Market Committee (FOMC) will meet to consider whether to cut the federal funds rate from its current range of 3.5% to 3.75%. The Fed cut its interest rate by a quarter of a percentage point at each of the previous three meetings in an effort to prevent the recent job market slowdown from turning into a serious increase in unemployment.

Fed officials have been divided about whether to cut interest rates to help the job market or keep them high to fight inflation. The Fed's dual mandate from Congress requires it to keep inflation low and employment high, and both have been headed in the wrong direction in recent months, creating a dilemma for the Fed. Lower borrowing costs could help encourage hiring, but could risk stoking inflation.

"A very large number of participants agree that risks are to the upside for unemployment and to the upside for inflation," Fed Chair Jerome Powell said after the December FOMC meeting. "So what do you do? You've got one tool. You can't do two things at once. So at what pace do you move? It's a very challenging situation."

After three consecutive cuts, financial markets now expect policymakers to hold interest rates steady to see what direction the economy takes, and which problem emerges as the more serious risk. As of today, traders were pricing in a 97% chance the Fed would hold steady, according to the CME Group's FedWatch tool, which forecasts rate movements based on fed funds futures trading data.

The fed funds rate influences borrowing costs on short-term loans such as credit cards and car loans, and indirectly affects rates for mortgages and other longer-term credit. Lower interest rates generally encourage spending and boost the economy, while higher interest rates reduce demand and push down inflation.

Since the last Fed meeting, tensions between Powell and President Donald Trump have boiled over, resulting in an investigation and an intensified search for the next Fed chair.

The Department of Justice in mid-January opened a criminal investigation into whether Powell lied to Congress during last year's testimony on the costs of renovating the Federal Reserve headquarters.

In a statement, Powell said the investigation is “a consequence of the Federal Reserve setting interest rates based on our best assessment of what will serve the public, rather than following the preferences of the president.”

The president has publicly and repeatedly said the Fed should sharply lower interest rates. However, Trump said he wasn't aware of the investigation. Despite that, Powell will likely field questions about the investigation during his press conference following the meeting.

The investigation is also occurring amid Trump's public search for Powell's successor. Powell's term as chair ends in May, but he could legally remain on the policy committee after.

Trump has said he's eager to replace Powell as chair and will announce his nominee early. So far, Trump has floated economic adviser Kevin Hassett and former Fed president Kevin Warsh. However, in recent days, betting markets pegged BlackRock Executive Rick Rieder as the front-runner.

Powell has been asked after multiple meetings if he will stay on after his term as chair ends, and is likely to face questions again this month. It remains to be seen, however, if his typical refusal to answer will change in light of the new developments.

"Powell has not entertained this question in the past when it was raised. We expect he will follow a similar path and remain noncommittal on his future," wrote analysts at Deutsche Bank in a commentary on Friday.

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