After spending nearly two years on a single-minded mission to stamp out soaring inflation by sharply raising interest rates, the Federal Reserve finds itself with a far more gratifying dilemma as it kicks off 2024: Figuring out when to start cutting rates.

Inflation has been coming down more rapidly than Fed officials anticipated following a pandemic-induced spike in prices even as the economy and labor market have remained astonishingly resilient.

At a two-day meeting that starts Tuesday, the Fed is expected to hold its key short-term rate steady at a 22-year high of 5.25% to 5.5% for a fourth straight meeting. Yet some economists think the Fed will begin lowering the benchmark rate as soon as March and that means it could signal its intentions at this week’s gathering.

Such a move likely would further propel an S&P 500 stock index that hit a record high last week on the prospect of a continued inflation slowdown and Fed rate cuts.

Several top forecasters, however, say the central bank instead will keep its options open by affirming that it’s done hiking rates without providing a sign that a drop in rates is imminent.

“The (Fed) will likely aim to keep a March cut on the table without sending a decisive signal,” Goldman Sachs economist David Mericle wrote in a note to clients.

Is the Fed going to lower interest rates in 2024?

Markets that predict movements in the federal funds rate think a March cut is a close call, reckoning there’s about a 46% chance of such a move. All told, markets are projecting six rate decreases this year to a range of 3.75% to 4%, double the amount forecast by the Fed last month.

Although Mericle believes the Fed will start paring back the rate in mid-March, he says Fed Chair Jerome Powell will probably note that officials will base their decision on two additional months of inflation data before that meeting.

Economists broadly agree the Fed will almost certainly remove from its post-meeting statement an assertion that the “extent of any additional (rate increases)” will depend on the delayed effects of prior rate hikes and economic and financial developments. In other words, the statement should solidify Powell’s comment in December that rate increases are likely over.

Instead, the Fed may refer to any “adjustments” to the key rate, indicating a cut is at least just as likely as a hike, Barclays wrote in a note to clients.

Yet deciding when to do a complete 180 and start chopping rates is trickier.

Fed meeting live updates: Will interest rates hold steady as inflation eases?

Why would the Fed decrease the federal funds rate?

Traditionally, the Fed reduces rates to jolt an economy that’s slowing or in recession. That’s not the case, at least not yet. Although high interest rates have pushed up the cost of mortgages and other consumer borrowing, the economy grew a sturdy 3.3% in the fourth quarter and a solid 2.5% for all of 2023 as consumer spending stayed strong.