WASHINGTON — Federal Reserve officials on Wednesday are likely to signal a slower pace of interest rate cuts next year compared to recent months, which would mean Americans could see only modest relief from the cost of lending still high for mortgages, car loans and credit cards. .

The Fed is expected to announce a quarter-point cut in its key rate, from about 4.6% to about 4.3%. This latest decision would follow a larger than usual cut in interest rates, of half a point in September and a quarter of a point in November.

Wednesday’s meeting, however, could mark the shift to a new phase in Fed policy: instead of cutting rates at every meeting, the Fed is more likely to cut rates at every other meeting — at most. Central bank policymakers could indicate they plan to cut their key rate only two or three times in 2025, instead of the four rate cuts they had considered three months ago.

So far, the Fed has explained its measures by describing them as a “recalibration” of ultra-high rates intended to tame inflation, which hit a four-decade high in 2022. With inflation now well under way weaker — to 2.3% in 2022. October, according to the Fed’s preferred gauge, down from a peak of 7.2% in June 2022 — many Fed officials say interest rates don’t need to be this high.

But inflation has remained stuck above the Fed’s 2% target in recent months, while the economy has continued to grow rapidly. On Tuesday, the government’s monthly retail sales report showed that Americans, especially those with higher incomes, are still willing to spend freely. For some analysts, these trends increase the risk that further rate cuts could provide an excessively strong boost to the economy and, in doing so, keep inflation high.

Additionally, President-elect Donald Trump has proposed a series of tax cuts – on Social Security benefits, tips and overtime – as well as loosening regulations. Collectively, these measures could boost growth. At the same time, Trump has threatened to impose various tariffs and carry out mass expulsions of migrants, which could accelerate inflation.

Chairman Jerome Powell and other Fed officials said they would not be able to assess how Trump’s policies might affect the economy or their own rate decisions until more details become available and it becomes clearer how likely it is that the president-elect’s proposals will be effective. actually be promulgated. So far, the presidential election result has only increased uncertainty surrounding the economy.

Regardless, it seems unlikely that Americans will benefit from significantly lower borrowing costs anytime soon. The average 30-year mortgage rate was 6.6% last week, according to mortgage giant Freddie Mac, below the peak of 7.8% reached in October 2023. But mortgage rates of around 3% that existed for nearly a decade before the pandemic are not. I will be returning in the foreseeable future.

Fed officials have stressed that they are slowing their rate cuts as their benchmark rate moves closer to a level that policymakers describe as “neutral” — a level that neither stimulates nor hinders the economy.

“Growth is significantly stronger than we thought and inflation is a little higher,” Powell said recently. “The good news is we can afford to be a little more cautious as we try to find neutrality.”

Most other central banks around the world are also cutting their benchmark rates. Last week, the European Central Bank cut its key rate for the fourth time this year, from 3.25% to 3%, as inflation in the 20 countries that use the euro fell to 2.3 % after a peak of 10.6% at the end of 2022.