Since FOMC's January meeting, financial conditions have noticeably eased. The committee had become more dovish in January, erasing around half of the tightening that came after the first hike in December. However, according to Fed Vice Chair Fischer's recent comments, it is very early to assess the implications of recent market volatility for the US economy.

Fed Governor Brainard in a speech said that with the weak global demand, tighter fiscal conditions and weaker inflation expectations, a risk management approach "argues for patience as the outlook becomes clearer". Overall, the US Fed is expected to continue with its wait-and-see attitude next week.

With the recent proof of continued rebound in labor market and strong underlying inflation pressures, it is expected that the Fed will not keep the interest rates at current near-zero levels for another year. Markets in general consider the US inflation risks benignly.

It will become difficult for the Fed to delay further hikes in rate based only on market moves, particularly with GDP growth picking up again. According to Bloomberg, markets are expecting a 4% possibility of a rate hike next week, a 45% probability of hike in June and a 74% of possibility of a hike in 2016.