June 13 (Reuters) - The U.S. Federal Reserve may have

just ducked out of the presidential campaign spotlight with a

fresh set of forecasts showing no interest rate cuts are likely

until after Election Day.

Central bank policymakers on Wednesday kept their benchmark

interest rate unchanged at 5.25%-to-5.50%, where it has been

since last July.

They also issued projections showing greater hesitance than

before about starting reductions in high borrowing costs that

have made it more costly for Americans to buy anything on credit

from a washing machine to a car to a house - a dynamic that has

contributed to consumers' persistently poor view of the economy

and Democratic President Joe Biden's management of it.

As recently as March, Fed officials were forecasting

interest rates would fall by three-quarters of a percentage

point this year, an outlook that would have meant cuts beginning

this summer and continuing through the run-up to the Nov. 5

presidential election. That could have opened the Fed to

criticism that it was tilting the scales late in the rematch

between Biden and Republican former President Donald Trump.

Now, though, amid stickier-than-expected inflation and a

still-strong job market, officials have scrapped that forecast

for one that foresees just a single quarter-point cut this year,

an outlook that suggests no action is likely before their final

meeting of the year in December.

JAWBONING

Investors for their part have not fully abandoned hope for

an earlier start, which would keep the Fed in the election

limelight. Interest rate futures markets still assign a roughly

six-in-10 chance of a rate cut in September.

A rate reduction then might improve consumer moods to the

benefit of Biden, a prospect Trump had already begun taking aim

at earlier this year.

"I think (Fed Chair Jerome Powell is) going to do something

to probably help the Democrats, I think, if he lowers interest

rates," Trump said earlier this year in a Fox Business

interview. "It looks to me like he's trying to lower interest

rates for the sake of maybe getting people elected, I don't

know."

A delay until after the election could now be a headwind for

Biden, whom polls show receives low marks for his handling of

the economy despite near-record low unemployment, record-high

household wealth and above-trend growth.

"This is obviously bad news for Joe Biden's campaign, who've

been desperately trying to convince voters that the economy is

in good shape thanks to so-called Bidenomics," Republican

consultant Jeanette Hoffman said.

Asked about the shift, White House press secretary Karine

Jean-Pierre said the administration had no comment "We've always

been really clear about the Fed. They're independent. We do not

comment on...the Fed."

The Trump campaign did not immediately respond to a request

for comment.

ELECTIONS AND THE FED

Election year rate cuts are not unheard of but are

relatively unusual.

The most recent occurred in 2020, when, with Trump as

president the Powell Fed cut rates to near zero in response to

the sudden onset of the COVID-19 pandemic. Trump still lost the

election to Biden that November.

The next most recent occurrence was when the Fed under Ben

Bernanke cut rates repeatedly in the fall of 2008 as the

financial crisis was erupting and Democrat Barack Obama and

Republican John McCain were battling for the White House. Obama

won.

In 1992, Alan Greenspan's Fed cut rates several times in the

months before Election Day in the face of rising joblessness.

Republican George H. W. Bush bemoaned what he saw as a

too-little-too-late response from the Fed and blamed it in part

for his loss to Democrat Bill Clinton.

"I think that if the interest rates had been lowered more

dramatically that I would have been re-elected president because

the recovery that we were in would have been more

visible," Bush said in a 1998 interview with David Frost. "I

reappointed him, and he disappointed me."

HOW A CUT COULD STILL HAPPEN

To be sure, circumstances in the next couple of months could

change sufficiently to warrant a cut by the Fed at its meeting

in mid-September, seven weeks before the election, though not

necessarily in a way that might benefit Biden.

Powell at his press conference on Wednesday laid out two

"tests" for starting rate cuts: The Fed either gets more

confidence that inflation is moving sustainably toward the

central bank's 2% goal, or there is an "unexpected

deterioration" in labor market conditions.

If the first test is the trigger, that could bode well for

Biden. If it is the second, it could be to Trump's benefit.

"If we saw troubling weakening more than expected" in the

labor market, Powell said, that could move rate cuts earlier

than now forecast. "We completely understand the risks, and

that's not our plan..to wait for things to break and then try to

fix them."