Three changes Goldman Sachs expects from the Federal Reserve on Wednesday

By: Myles Udland

On Wednesday, the Federal Reserve will announce its latest monetary policy decision.

Expectations are that the Fed won't change course on policy, but could lay further groundwork for an interest rate hike later this year, perhaps as soon as the September FOMC meeting.

The Fed has not raised interest rates since July 2006.

Along with its policy decision, Fed chair Janet Yellen will also hold a press conference in which she may give additional color on her assessment of the economy and the Fed's next steps.

"The expected date of the first hike in the fed funds rate is closer than it has been at any point so far in the recovery," writes Goldman Sachs economist Kris Dawsey in a note to clients ahead of the report. "As a result, the signal from the June FOMC meeting will be especially important."

Dawsey expects that the meeting's "overarching message" will be that a rate hike is coming in September.

Goldman's base case is for a September hike, but Dawsey adds that, "the FOMC will want to preserve optionality at the June meeting, and there is still a significant probability that the hiking cycle will not begin until December or later."

In his note, Dawsey also outlined the three big changes the firm expects to see from the Fed's statement, the Fed's economic projections, and the famous "Dot Plot," which gives an outline of where FOMC members expect the Fed Funds rate will be at the end of this year.

Goldman also expects the Fed's outlook for the economy will be downgraded somewhat.