One thing everyone agrees on about this week's Federal Reserve meeting: Interest rates won't be rising again soon.

After that, all bets are off.

Goldman Sachs (GS - Get Report) sees a good chance that the central bank's post-meeting statement will point to a June rate hike. It also sees some chance of the Fed will raising rates three times this year, after boosting the Federal funds rate above near-zero levels for the first time since 2008, in December.

Morgan Stanley (MS - Get Report) says the Fed's dovishness on monetary policy will make long-term rates fall, giving aggressive investors a way to bet inexpensively (after the drop) on long rates rising later in the year. 

Bank of America Merrill Lynch (BAC - Get Report) says the Fed will stand pat, make its statement marginally less dovish than the one it issued in March and prepare for the first of two 2016 hikes in June or July.

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"We're looking for prudent risk management," Moody's Analytics economist Ryan Sweet says. "It's better for the Fed to err on the side of caution, making sure the turbulence in financial markets earlier this year didn't have a greater economic cost than previously thought and that the effect is fading."

Moody's is still looking for the Fed to hike rates in June -- futures markets put odds of that move at 23% -- but Sweet says "it's far from a slam dunk."

Certainly, not much about the economy is pointing to the Fed moving quickly to tighten rates. The thing that makes it complicated is that the financial conditions that raised the market cost of money enough without the Fed acting to make Janet Yellen & Co. hold off have eased considerably over the last two months, letting rates for Treasuries, mortgages and junk bonds dip anew. That could (emphasis on could) pave the way for a hike in the Fed funds rate in June.

After a bit of improvement, manufacturing data have turned weak again, with poor readings last week from the Purchasing Managers Institute and the Philadelphia Federal Reserve manufacturing index. Retail sales data have been weak the last two months. And new housing starts weakened in March too, though one-month moves in that index don't matter much.

The overall gross domestic product report for the first quarter is due out Thursday, with consensus forecasts pointing to 0.7% annualized growth, according to Econoday.

"First quarter [growth numbers] won't be pretty,'' said Sweet, whose firm's tracking estimate says first-quarter gross domestic product growth will be negative.

So you have a weak expansion, with its primary problem (weak exports from companies including Caterpillar (CAT - Get Report) and Boeing (BA - Get Report) ) intact and its primary engine (3% or better annualized consumer-spending growth at Wal-Mart Stores (WMT - Get Report) and its rivals) in question. All that points to rates staying lower for longer. And it's only partly offset by an inflation outlook that Merrill says is moving closer to the Fed's 2% target rate, as the euro recovers some of its 2015 loss in value to the dollar.

In that scenario, the smart move for a small investor is usually to wait for the question about whether consumers will keep the expansion moving to be answered more definitively between now and the Fed's next meeting in June.

But Morgan Stanley is actually proposing a speculative trade to bet on the market's dovishness after the Fed releases its statement Wednesday. If rates on longer-term Treasuries fall as much as they anticipate, flattening the yield curve, the smart move could be a "curve steepener" trade that bets on the spread between short-term and long-term Treasurys to widen again later in the year. That spread, now 138 basis points, could dip close to 130 if the Fed uses dovish language, Morgan economist Ellen Zenter writes.

What's really happening is that the Fed wants time to figure out how much the market's panic over China and energy-related junk bond defaults this winter harmed the real economy, Merrill Lynch economist Michelle Meyer says. That likely means a dovish tone this week, but with language that would allow a move upward in June if the markets remain calm, she added. The Fed could also wait until July, after British voters decide whether to take the United Kingdom out of the European Union as well, Meyer said.

"Remember, two hikes this year would still be considered extremely gradual and accommodative'' by historical standards, Meyer said.

But of course, there will be a mountain of data between now and June. So remember, any conclusions brokers reach about this summer's path of policy will be revisited with every report on growth, jobs, inflation and consumer spending.

 

This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.