WASHINGTON (Reuters) - The Federal Reserve is expected to leave interest rates unchanged on Wednesday, with new economic projections from the U.S. central bank's policymakers likely to show fewer rate cuts this year and a delayed start to monetary policy easing.

Fed officials will receive a new round of inflation data that could shape their outlook just hours before they conclude their latest two-day meeting and release a fresh policy statement and updated quarterly projections.

But with the Fed's efforts to lower inflation to its 2% target showing only modest improvement this year through April and strong job growth allaying concerns of a weakening economy, analysts expect the central bank to maintain its "no-rush" attitude towards rate cuts, leaving the benchmark policy rate in the 5.25%-5.50% range that was set last July.

"Given that inflation remains above target and activity remains robust, the Fed can exercise patience in determining when it would next adjust its policy rate," Bank of America economists wrote about a meeting they felt would see little change to the central bank's policy statement or in the guidance Fed Chair Jerome Powell offers in his post-meeting press conference.

The statement is due to be released at 2 p.m. EDT (1800 GMT), with Powell speaking to reporters half an hour later.

Given the current stalled progress on inflation, many analysts expect the Fed's "dot plot" projection for its benchmark policy rate to show only two quarter-percentage-point rate cuts by the end of this year, versus the three anticipated as of March - if only to account for the lapse of time.

But the median could easily tip to only one cut among a nearly evenly divided group of policymakers."If there is any risk ... it's that there will be only one 25-basis-point rate cut this year," said Joe Brusuelas, chief economist for RSM US, with Powell using his press conference to "manage expectations" at a point where Fed policymakers feel particularly uncertain about the path the economy may follow.

CPI DATA

Powell and other policymakers have minimized the risk of a further rate increase. The Fed aggressively raised rates in 2022 and 2023 after inflation surged to a 40-year peak.

The personal consumption expenditures price index, the Fed's preferred inflation measure, has declined from a 7.1% peak annual pace in June 2022 to 2.7% as of April. The current policy rate is regarded as restrictive enough to discourage investment and spending and gradually return inflation to the Fed's target.

Yet policymakers are not ready to commit to any cuts until they've seen more progress. Just as they acknowledge risks that unemployment could rise fast and warrant rate cuts to support the economy, they see aspects of inflation, particularly in housing and the broad services sector, that may have stalled at too high a level.

Economists polled by Reuters expect the consumer price index rose only 0.1% in May, which would be the weakest reading since October, with "core" prices excluding food and energy forecast to increase 0.3%. The U.S. Labor Department is due to release the CPI report at 8:30 a.m. EDT.

While the year-over-year CPI rates are expected to show no or little change from April, the report's details should be seen "as a step in the right direction," after inflation surged more than expected earlier in 2024, BNP Paribas economists wrote.

In their final comments before the latest policy meeting, a number of central bank officials, including Fed Governor Christopher Waller, said they needed to see several more months of improving inflation data before deciding to cut rates, statements investors have construed as pushing back any rate reduction to the Fed's Sept. 17-18 meeting at the earliest.

Even that start date for the policy easing is a virtual toss-up. As of Tuesday, there was less than a 51% likelihood of a U.S. rate cut in September, according to CME Group's FedWatch Tool.