Getty

In the year and a half since Jerome Powell took over as chairman of the Federal Reserve, one thing has become clear: He usually doesn't surprise people. 

Historically, the central bank has raised interest rates when the economy is strong -- to keep it from overheating -- and cut them when a slowdown is coming -- to give it a boost.

Yet even in late 2018, as signs appeared that cracks might be appearing in the U.S. economy, the Fed raised rates again in December after Powell had been hinting for months that an increase was in the offing.

Early this year, Powell began to signal that U.S. monetary policy has been successfully "normalized." It was a coded way of telling investors that interest rates were high enough and likely wouldn't go higher anytime soon. He pledged "patience" on monetary policy -- and stuck to his word, making no change to the official borrowing rate for the next six months.

"Powell is a really good communicator," said Gibson Smith, founder of the bond-focused money manager Smith Capital Investors in Denver.

The Fed's monetary-policy committee began another two-day meeting Tuesday, and the most-recent messaging from Powell has been that the central bank is still in patient mode. It's essentially waiting for the economy to break one way or another before making any changes to interest rates. 

Based on the pattern, Powell is unlikely to surprise markets when the committee announces its decisions on 2 p.m. ET Wednesday. 

Trading in futures contracts on federal funds implies just a 20% chance that the Fed will cut interest rates at this week's meeting. The benchmark is currently set in a range of 2.25% to 2.4%.  

But the odds are 67% in favor of a quarter-percentage-point cut in July, according to the data provider FactSet. 

If Powell sticks with his tendency to communicate actions well in advance, he would likely bridge the gap by signaling at this meeting that a July rate cut is under consideration, according to economists at German lender Deutsche Bank. They expect the Fed committee to drop the word "patient" from its post-meeting communique.

"This backdrop should necessitate a dovish message from the committee," according to the Deutsche Bank report, lead-written by Chief U.S. Economist Matthew Luzzetti. "This shift should signal that downside risks are building and that the committee stands ready to lower rates in coming months" if warranted. 

The Deutsche Bank economists predict the Fed will cut official interest rates at its July, September and December meetings by a quarter percentage point each time, to bring the benchmark down to 1.63% going into the 2020 election year.  

An eventual rate cut by the Fed could help to prolong the current decade-old U.S. economic expansion, one of the longest in U.S. history. It also could prove a boon to President Donald Trump's re-election prospects in 2020, since lower rates would likely serve as an economic stimulus. The Trump administration promised 3% annual growth when it pushed for the $1.5 trillion tax-cut package in late 2017.    

The risk is that investors assume that these stimulus measures -- from monetary policy as well as the fiscal stimulus from Trump's nearly $1 trillion annual U.S. government budget deficits -- will go on for a lot longer, and that they'll take the cue from low interest rates to borrow more money and take bigger risks in search of bigger profits. 

Witness the rapid growth in loans to junk-grade companies, known as leveraged loans, which are hugely profitable for banks and the private-equity firms like Blackstone (BX - Get Report) that use them to fund corporate takeovers. 

But when a downturn comes, the loan losses likely would become that much harder to contain. 

"The risk is that these types of behaviors continue to grow, and the bigger something gets, the harder it's going to be when things start to move in the opposite direction," said Darrell Spence, an economist for the $1.9 trillion money manager Capital Group in Los Angeles.