The Federal Open Market Committee meets on Wednesday for the last time before the US presidential election — and the first time since it embraced a new monetary strategy that will be more tolerant of higher inflation and more committed to promoting full employment.

The US economy is still grappling with the shock of the Covid-19 pandemic, and with less fiscal support on the horizon, Jay Powell, the Federal Reserve chairman, and other officials will have to weigh what additional support they can offer for the recovery.

The unemployment rate has already fallen to 8.4 per cent, well below the Fed’s median forecast of year-end joblessness of 9.3 per cent — so the question will be how low it is expected to go by December.

Will Fed officials expect US interest rates to remain at zero until then, especially given their ultra-dovish strategy shift announced last month, which allows them to let inflation run higher than the 2 per cent target before they tighten policy.

The path of coronavirus over the autumn and winter, as it intersects with the seasonal flu, is unclear; new fiscal support for the economy is very much in question; and the looming US election could be destabilising if it delivers an uncertain result. .

Mr Powell — and other Fed officials — have been clear that they would like Congress and the White House to agree on a new relief package to sustain the rebound.

The Fed also has acknowledged it lacks the tools to solve all the problems in the economy, since it can only lend money, but not spend it to help businesses or households.

Fed officials past and present have since lent their support to the new monetary framework, but there have been few specifics about what action is to be taken, and when. .

Some economists have suggested the Fed might tweak that to include a reference to an average 2 per cent inflation objective “over time” — reflecting its new policy framework