The last time the Federal Reserve cut interest rates was in March 2020, right before the global economy was turned upside down by a pandemic. Since then, the Fed has been hiking the federal funds rate—or the rate at which the Fed lends to banks—to tame high inflation and to loosen the labor market. The central bank started raising interest rates in 2022 as inflation spiked, lifting the federal funds rate from nearly 0 to 5.5%—the highest it’s been in more than two decades.

The Fed on Wednesday signaled that interest rate cuts aren’t imminent, leaving them unchanged for now. In a news conference, Federal Reserve chair Jerome Powell dashed expectations that the Fed would begin to cut interest rates in March.

“I don’t think it is likely that the committee will reach a level of confidence by the time of the March meeting to identify March as the time to do that, but that is to be seen,” Powell said. “So, I wouldn’t call it… the most likely case.”

And indeed, there’s a growing chorus of Fed watchers who now forecast the next interest rate cut as coming in June.

One hurdle to lowering interest rates is that inflation—which stands at 3.4% annually—remains higher than what the Fed normally sees as its target level of 2%.

Lowering rates makes borrowing money cheaper, which allows businesses to grow and hire more workers. Homeowners also want cheaper mortgages, and consumers want cheaper credit card bills.

Here’s what economists and business groups are saying:

“The FOMC statement was broadly as we expected, moving towards a definitively more neutral stance. The statement says, ‘the Committee judges that the risks to achieving its employment and inflation goals are moving into better balance,” but it maintains the Committee is ‘highly attentive to inflation risks” primarily because inflation is still “elevated’.

We continue to expect the first rate cut in June, and four 25bp cuts in total this year followed by an additional 200bp in 2025.”

“The Fed says it has confidence in the outlook but needs ‘greater confidence’ before it starts normalizing its policy stance. What constitutes greater confidence? More progress in reducing services inflation - and shelter inflation in particular - and slower wage growth.

Powell significantly raised the bar for a March cut by saying, ‘I don’t think it is likely that the committee will reach a level of confidence by the time of the March meeting’ (to reduce the policy rate). Based on the outcome of the January FOMC meeting, we now look for the rate cut cycle to begin in June and expect 25bp rate cuts in June, September, and December This would mean 75bp of rate cuts this year and we retain our view of 100bp of rate cuts in 2025.”

“Amidst an otherwise dovish FOMC press conference, Fed Chair Powell gave a strong signal that a March funds rate cut ‘is probably not the most likely case.’ Given this comment—as well as our expectation of solid growth in Q1 and a temporary firming in sequential inflation in January—we have pushed back our forecast of the first cut from March to May.

However, we continue to expect 5 cuts in 2024 and 3 more in 2025 because we expect core PCE inflation to fall at least a couple of tenths below the FOMC’s 2.4% median projection this year, with further declines in 2025. We now expect the FOMC to deliver four consecutive cuts at the May, June, July, and September meetings before slowing to a quarterly pace and adding a final cut this year in December. Our revised probability-weighted average Fed forecast is similar to our baseline in 2024 but a bit more dovish in 2025, though it is a bit less dovish than market pricing of about 6 cuts in 2024.”

“Even with the bump in inflation the Fed will likely hold interest rates where they are to allow more time for its previous rate increases to lower inflation.”

“A March cut? Fuhggeddaboutdit!” wrote Derek Holt, Scotiabank’s head of capital market economist, in a note to clients.