The Federal Reserve left interest rates unchanged Wednesday and officials tweaked projections in ways that suggest less rate-cutting may lie ahead than previously envisioned.

Why it matters: The Fed's announcements suggest its plans to bring rates down this year remain intact, though the questions of "when" and "how much" are uncertain.

Driving the news: The Federal Open Market Committee, the monetary policy-setting body of the central bank, left its target interest rate steady in a range between 5.25% and 5%, at the conclusion of a two-day meeting.

• The central bank last raised rates last July, and has now left them unchanged at each of its last five meetings.
• The committee "does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," its statement said, repeating language from the previous meeting.
• Fewer leaders of the central bank anticipate deep rate cuts this year than did in December, and their consensus view now involves fewer rate cuts for 2025 than anticipated three months ago.

State of play: Several inflation indicators for the first two months of 2024 have come in higher than expected, undermining the case for imminent interest rate cuts.

• Speaking to reporters, Fed chair Jerome Powell said that data hasn't "really changed the overall story, which is that of inflation moving down gradually, on a sometimes bumpy road, toward 2%."
• "We were saying that it's going to be a bumpy ride," Powell said. "Now here are some bumps— and the question is 'are these more than bumps?' And we can't know that."

Yes, but: The Fed on Wednesday released new projections showing that these developments have caused some officials to adjust expectations for just how much rate-cutting could be on the way.

By the numbers: The median official continued to anticipate three interest rate cuts this year, unchanged from last December. However, the details of those projections showed movement in the views of at least some officials.

• In December, for example, five top Fed officials anticipated four or more rate cuts this year. Now only one official holds that view (the projections are not attached to specific names).
• In December, the median official anticipated rates would fall to 3.6% by the end of next year. That figure is now 3.9%, implying less rate-cutting ahead in 2025 if the economy evolves as the officials expect.
• The median view of where officials expect rates to be in the longer-run also ticked up slightly, to 2.6% from 2.5%.

Between the lines: The median official also raised their projection for GDP growth this year, to 2.1% from 1.4% in December, and their median projection for inflation excluding food and energy ticked up to 2.6% from 2.4%.

• In other words, the consensus on the Fed pointed to both stronger growth and less of a drop in inflation than was the case three months ago, helping explain diminished rate cute expectations.

The bottom line: Fed officials aren't tossing out their entire outlook based on two months of inflation data, and continue to anticipate inflation falling and rate cuts later in the year—just not to the extent they did three months ago.

• That was reflected in sharp moves in financial markets: the yield on the 2-year Treasury bond plummeted as much as 18 basis points, as expectations of even fewer rate cuts penciled in did not come to pass. Meanwhile, stocks hit record highs.

Editor's note: This story was updated with comments from Powell.