The Fed must chart a new course as the economy strengthens.

The Federal Reserve is staring down a challenge that would have been all but unthinkable a year ago: With its policies set on emergency mode to bolster growth in the face of the pandemic’s shock, it must now navigate an economy that is expected to strengthen rapidly in the coming months.

Officials will release an interest rate policy decision and their first economic projections of 2021 at 2 p.m. on Wednesday, and they are virtually certain to leave borrowing costs unchanged at near zero.

But analysts and Wall Street investors alike are eager to see whether growing economic optimism will shake up the outlook for policy in the months and years ahead.

The Fed slashed interest rates to rock bottom a year ago as the pandemic shut down huge swaths of the economy. It has also been buying $120 billion in bonds per month, a policy meant to keep credit cheap and help the economy rebound from a virus that has thrown millions out of work.

Jerome H. Powell, the Fed chair, has been clear for months that officials expect to be patient in removing that policy help — a cautious tone that he is expected to maintain at a news conference on Wednesday.

“This is one of the most critical Fed meetings we’ve had in a while,” said Michelle Meyer, head of U.S. economists at Bank of America Merrill Lynch. “Markets are really paying attention, and they’re going to dissect everything he says.”

That’s because the economic backdrop is shifting. Coronavirus vaccines are fueling hopes for reopening parts of the service sector. A freshly signed stimulus package will pump $1.9 trillion into the economy, with an eye on preventing evictions, funneling cash to parents and putting $1,400 checks directly into bank accounts.

Against that improving backdrop, economists in a Bloomberg survey expect the Fed to increase rates twice in 2023, the news outlet reported. In December, they typically expected rates to remain on hold until 2024 or later.

As investors expect faster growth, higher inflation and a quicker-moving Fed, they have pushed up the yield on 10-year Treasury notes. That has weighed on stock indexes, which tend to fall when rates rise.

The Fed’s economic projections — which anonymously report officials’ forecasts for interest rates, unemployment, inflation and growth both through 2023 and in the longer run — could show a shift when they are released on Wednesday.

Wall Street will pay particular attention to the inflation forecast and the policy rate path. The Fed’s median interest rate forecast previously showed no rate increases over the next three years, but analysts expect that officials could now pencil in one move in 2023.

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