Fed Expected to Scale Back 2023 Rate Cut Forecasts As Inflation Proves Stickier Than Anticipated

• Fed likely to lower 2023 rate cut forecast from 3 to 2 at meeting, raising projections for growth and inflation • January and February inflation reports showed prices rising faster than expected, worrying some economists • Decline in goods prices may have played out while services inflation remains sticky, keeping inflation above 2% target • Strong 4% H2 2022 growth and solid job gains mean Fed may want to "err on the side of caution" with rate cuts • Wage growth slowing but not as fast as hoped, core PCE inflation could stay near 2.4% this year instead of falling more