The Federal Reserve’s Open Market Committee is meeting this week in the context of a weaker data patch in which "hard" measures of economic activity continue to lag better sentiment indicators. As a result, the central bank is widely expected by markets to maintain an unchanged policy stance when the two-day meeting concludes on Wednesday. Nevertheless, this will be an interesting test of the view, which I and some others have espoused, that the Fed is in the process of shifting operating regimes — from following markets to being more willing to lead them. Last week’s disappointing reading of 0.7% gross domestic product growth for the first quarter, the lowest in three years, added to other data releases (such as retail sales, inflation and autos) suggesting that the US economy — and consumption in particular — is going through a softer economic patch. In previous years, this would have provided the Fed with the excuse to soften its policy signals, assuring markets that monetary pol...
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