Fed patience to be tested, or not?

When the Federal Reserve breaks from its two-day meeting Wednesday, Wall Street will want to know whether it can keep its promise of "patience" as it relates to the start and magnitude of interest rate hikes.

In the Fed's final meeting of last year, Chair Janet Yellen changed the language it uses to update markets on its interest-rate hike timeline. The Fed coined "patient" as its new go-to term to describe its likely path. The Fed has had to acknowledge the improving U.S. economy, which grew at a peppy 5% pace in the third quarter of 2014 and is expected to grow 3% or more in the final quarter. An improving job market, which includes an unemployment rate of 5.7% which is nearing the Fed's definition of healthy employment, has also put the rate-hike talk on the fast track.

Wall Street is looking for the Fed to shed light on what impact plunging oil prices, and a subsequent drop in consumer inflation, will have on its deliberations. The ailing eurozone economy and sizable 1.1 trillion euro stimulus plan announced by the European Central Bank last week could also influence the Fed's thinkingon the timing of its first rate hike later this year.

"The expectation for the two-day meeting is that the message will stay consistent, emphasizing 'patient,' which is the new 'considerable time,' " says Jason Pride, director of investment strategy at Glenmede.

The Fed has said that rates could rise in coming meetings, which include get-togethers this month, March, April and June. Wall Street is leaning toward a hike no earlier than its June meeting.

There are some Fed watchers who believe the slip in the oil patch, a recent spate of subpar U.S. data and deflationary fears in Europe could provide the Fed with yet more ammunition to stay patient with their rate-hike scheduleand plans. Some think it could actually give the Fed cover to delay the first hike to a date later in 2015. "The Fed will have to take on board a series of disappointing macro statistics ... both domestically and internationally in setting the course for the next six to nine weeks," according to Steven Ricchiuto, chief economist at Mizuho Securities USA.

As usual, Wall Street will be looking for any clue that will offer insight into the central bank's thinking on how new developments are influencing their thinking, if at all.