March 18 Reuters U.S. central bankers are not expected to cut borrowing costs this week, but their new economic projections may be a wild card, potentially signaling fewer interest rate cuts and a later start to the policy easing than they previously had estimated.

Keeping interest rates at the current high levels for a longer period of time could have big implications for American households and businesses, especially in a presidential election year when the state of the economy is already a central talking point for President Joe Biden and his Republican challenger, Donald Trump.

Market bets still point to the Federal Reserve39;s June 1112 meeting as the most likely start for reductions to the central bank39;s policy rate, which has been in the 5.255.50 range since last July.

But with inflation still running well above the Fed39;s 2 target and coming in stronger than expected in the first two months of this year, traders are pricing a 40 chance that the first rate cut only happens at the July 3031 meeting.

Bets in financial markets also point to an endof2025 policy rate in the 3.754.00 range, a quarter of a percentage point lower than Fed policymakers forecast in December.

Two months of higher inflation readings is too soon to declare that all is lost, but it certainly raises the risk that you have a little bit more of an inflation problem, and in that case it makes sense to be cautious, said Jeremy Schwartz, senior U.S. economist at Nomura Securities. You have to…