(CNN) — Americans hamstrung by high borrowing costs on car loans, mortgages and credit cards shouldn’t expect much of a break this year.

That’s because some Federal Reserve officials are reconsidering forecasts they made three months ago that called for three rate cuts this year.

Currently, the Fed’s target interest rate is between 5.25% and 5.5%, a 23-year high. Four of the 19 officials on the rate-setting committee now see rates staying above 5% this year, implying one or no rate cuts, according to new economic projections from last week’s meeting. Meanwhile, in December, three officials saw rates staying above 5%. On the opposite end, just one official — compared to five previously — sees rates dipping below 4.5%, implying four cuts.

The stakes are high because there are consequences if the Fed cuts rates soon or if it leaves rates where they’ve been for the past eight months.

If the central bank cuts prematurely, it could risk losing its grip on inflation, which hasn’t yet returned to its 2% target. But if the Fed waits too long to cut, high interest rates could further punish Americans and the economy by potentially triggering a recession.

Beyond their official projections, various officials have also been making their case in public speeches and media appearances on how the Fed should approach the difficult task of when to begin cutting interest rates.

Atlanta Fed President Raphael Bostic, currently a voting member on the Fed’s rate-setting committee, went as far as to suggest that the central bank should only cut rates once this year.

“The economy continues to deliver surprises and it continues to be more resilient and more energized than I had forecast or projected,” Bostic said last week. That’s why he said he revised his belief that the central bank should cut rates twice this year to once.

First rate cut hinges on inflation data

In February, Bostic told CNN that the first rate cut could come “sometime in the summertime.” That’s also Wall Street’s current expectation.

Powell hasn’t publicly shared his timeline for cutting rates but has repeatedly explained that the timing of that first rate cut will ultimately be determined by what inflation gauges and other key economic data show. That’s precisely what gave some investors who were previously estimating several cuts in 2024 a reality check.

Inflation readings for the first two months of the year came in hotter than expected, reflecting some persistent price pressures in services and housing.

Rising shelter costs and climbing gas prices contributed to 60% of the monthly rise in consumer prices in February, according to the latest Consumer Price Index. Consumer prices were up 3.2% in February from a year earlier, higher than the 3.1% annual rise economists were expecting. The Producer Price Index, another closely watched inflation gauge, rose in February at its fastest pace in months.

The Fed’s preferred inflation gauge, the Personal Consumption Expenditures price index, also reflected stubborn prices in January.

“I don’t think inflation has stalled, because I expect some of the softening in consumer spending and in the labor market to feed through into services and shelter inflation over the coming months,” David Page, head of macroeonomic research at investment management firm AXA IM, told CNN.

Inflation no longer slowing, which would prevent any rate cuts, is one of Wall Street’s biggest concerns about the economy. But economists still widely expect inflation to gradually drift lower — perhaps just not as much as giddy investors were expecting a few months ago.

The Fed is still in wait-and-see mode

Powell said last week that January’s monthly jump in prices might have been skewed by “seasonal factors” and that it doesn’t necessarily mean inflation’s cooldown has halted.

He hasn’t specified — and is unlikely to signal — the number of rate cuts he believes are appropriate for this year. Rather, he said at last week’s meeting he and other Fed officials “want more confidence that inflation is coming down sustainably toward 2%.”

That means rates will stay where they are as Fed officials await more data to know if inflation is indeed headed toward 2%.

“The path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market,” Fed Governor Lisa Cook said Monday during a lecture at Harvard University.

Translation: There’s no need to rush into cutting rates, even if some recent inflation readings haven’t been ideal.

The case for three cuts

But Chicago Fed President Austan Goolsbee said three cuts this year are “in line with my thinking.”

“We’re in an uncertain state, but it doesn’t feel to me like we’ve changed fundamentally the story that we’re getting back to target,” Goolsbee, who is not voting on interest rate decisions this year, said in an interview with Yahoo Finance on Monday.

However, Powell said at December’s meeting that central bankers would not want to wait until inflation returns to the Fed’s target to begin cutting interest rates because “it would be too late.”

His rationale is that it can take a while for the full effect of a given level of interest rates to work its way through the economy. The so-called “long and variable lags” of monetary policy is one key factor officials are considering when it comes to approaching rate cuts and why some may still be considering three cuts this year despite some undesirable inflation data.

Fed Governor Christopher Waller, seen as a key messenger of the Fed’s guidance on policy, is delivering a speech on the economy Wednesday in New York. He has cheered inflation’s descent and said further improvement could open the door to rate cuts — if that actually bears out.

Later in the week, Powell will participate in a discussion on monetary policy hosted by the San Francisco Fed.

(Copyright (c) 2024 CNN. All Rights Reserved. This material may not be published, broadcast, rewritten, or redistributed.)

Join our Newsletter for the latest news right to your inbox