A recent pickup in inflation isn’t likely to shift Federal Reserve policymakers’ forecasts for three interest-rate cuts this year and four in 2025, according to economists surveyed by Bloomberg News.

The Federal Open Market Committee will keep rates steady in the 5.25% to 5.5% range for a fifth consecutive meeting next week, with policymakers reducing rates for the first time in June, economists say. A solid majority of survey respondents see Fed officials penciling in three or more cuts in 2024, while more than a third expect two or fewer.

Fed Chair Jerome Powell and his colleagues will update their economic and rate projections at the March 19-20 meeting for the first time since December, and survey respondents expect only small tweaks to their outlook with no change in the projected rate path.

“We look for the FOMC to nudge up its median forecast for inflation for this year, but otherwise we do not anticipate large changes to the macro or interest-rate projections,” said Kathy Bostjancic, chief economist at Nationwide Mutual Insurance Co. Recent sticky inflation “should add to Powell’s reticence in sending a green light on a near-term rate cut.”

Economists see policymakers marking up their 2024 forecasts for US gross domestic product to an annual rate of 1.7% from 1.4% and lifting their inflation projection to 2.5% from 2.4%.

The survey of 49 economists was conducted March 8-13.

In congressional testimony last week, Powell emphasized the central bank has made good progress in nudging inflation toward its 2% target and needed “just a bit more evidence” before making an initial rate cut. “We’re not far from it,” he told lawmakers.

Recent economic data reinforces the case for caution. Underlying US inflation topped forecasts for a second month in February, and a key gauge of pipeline price pressures accelerated.

“With growth, jobs and inflation all too hot for comfort the Fed isn’t in a position to cut interest rates in the near-term,” said James Knightley, chief international economist at ING.

Almost all respondents expect the Fed to maintain its January guidance that no reduction would be appropriate until the central bank has more confidence inflation is moving sustainably toward 2%.

In addition to the decision on rates, the committee is scheduled to hold a discussion of issues surrounding its $7.5 trillion balance sheet. The Fed has been passively shrinking its portfolio of assets through the runoff of maturing securities — a process known as quantitative tightening.

A plurality of economists expect the Fed to announce a slower pace of tightening in June, with the tapering starting in June or July. As a result, they expect the balance sheet to fall to $6.7 trillion in December 2025.

Soft Landing?

Economists have become increasingly optimistic about the economic outlook. Just 17% of respondents are forecasting a recession in the next 12 months, well below the 58% seen last July.

“The economy continues to outperform amid a resilient American consumer,” said Joe Brusuelas, chief economist with RSM US. That strength creates a risk “that the Fed remains much more patient on rate cuts than the market has priced in.”

But most forecasters don’t think the Fed can declare victory just yet. Only 27% agree with former Vice Chairman Alan Blinder’s assessment that the Fed has already achieved a soft landing for the economy, while 73% disagreed.

Blinder recently argued in a Wall Street Journal commentary that such an outcome — low inflation and a still strong labor market — had already been achieved.