Federal Reserve is likely to scale back plans for rate cuts because of persistent inflation

Federal Reserve officials on Wednesday will likely make official what's been clear for many weeks: With inflation sticking at a level above their 2% target, they are downgrading their outlook for interest rate cuts.

In a set of quarterly economic forecasts they will issue after their latest meeting ends, the policymakers are expected to project that they will cut their benchmark rate just once or twice by year's end, rather than the three times they had envisioned in March.

The Fed's rate policies typically have a significant impact on the costs of mortgages, auto loans, credit card rates and other forms of consumer and business borrowing. The downgrade in their outlook for rate cuts would mean that such borrowing costs would likely stay higher for longer, a disappointment for potential homebuyers and others.

Still, the Fed's quarterly projections of future interest rate cuts are by no means fixed in time. The policymakers frequently revise their plans for rate cuts — or hikes — depending on how economic growth and inflation measures evolve over time.

But if borrowing costs remain high in the coming months, they could also have consequences for the presidential race. Though the unemployment rate is a low 4%, hiring is robust and consumers continue to spend, voters have taken a generally sour view of the economy under President Joe Biden. In large part, that's because prices remain much higher than they were before the pandemic struck. High borrowing rates impose a further financial burden.

The Fed's updated economic forecasts, which it will issue Wednesday afternoon, will likely be influenced by the government's May inflation data being released in the morning. The inflation report is expected to show that consumer