The US Federal Reserve is expected to lower borrowing costs on Wednesday in what some observers are calling a “hawkish cut” set to be delivered alongside policymakers’ updated interest rate outlooks and economic forecasts covering the first months of the . The anticipated quarter-percentage-point move would lower the US central bank’s benchmark policy rate to the 4.25 per cent to 4.50pc range, a full percentage point below where it stood in September when it began used to counter a surge in inflation that began in 2021. How much further and how fast rates will fall next year remains increasingly uncertain with inflation still lodged above the Fed’s 2pc target, the economy growing faster than expected, and the prospect that President-elect Donald Trump’s and policies could change the economic landscape in once he takes office in January. In their most recent set of quarterly projections in September, Fed officials anticipated cutting the benchmark rate by another full percentage point to put it at around 3.4pc by the end of 2025. Between data showing inflation stalled above the 2pc target and in the November 5 presidential election, investors now see the Fed perhaps cutting the benchmark rate by only half a percentage point next year — and they will be studying the projections and Fed Chair Jerome Powell’s remarks in a post-meeting press conference closely to see if policymakers are also becoming more cautious about further rate reductions. “While the Fed will remain keen on projecting additional easing for 2025, guidance regarding the pace of rate cuts will likely be more cautious going forward,” economists with TD Securities wrote ahead of this week’s two-day meeting. The Fed will release its policy statement and updated economic projections at 2pm EST (7pm GMT), with Powell scheduled to begin speaking half an hour later. Data, including the release on Tuesday of a strong retail sales report for November, have done little to alter the Fed’s description after its last policy meeting of an economy growing at a “solid pace” with low unemployment and inflation that, while falling, “remains somewhat elevated”. Between a new policy statement, the projections and Powell’s press conference, the net result is likely to be “a hawkish cut” with a slower pace of reductions to come, Diane Swonk, chief economist at KPMG, ahead of this week’s meeting. “Debate will be heated,” she said. “The economy remains stronger than participants at the meeting thought it would be when they started cutting in September, while improvements in inflation appear to have stalled … The Fed is going to want time to pause to see where we are and how policy may shift after the president-elect is sworn in.” Trump takes office on January 20, and the Fed meets just over a week later on Jan 28-29. A total of 58 of 99 economists in a recent poll said they expected the US central bank to skip cutting rates at that meeting as policymakers take stock of how the economy is evolving.