WASHINGTON (AP) — Will the Federal Reserve cut its key interest rate sometime next year — and, if so, by how much?

Wall Street investors have been obsessed with such questions since a top Fed official hinted last month that rate cuts were at least possible as early as March.

The Federal Reserve kept its key interest rate unchanged Wednesday for a third straight time, a sign that it is likely done raising rates after having imposed the fastest string of increases in four decades to fight painfully high inflation.

The Fed’s policymakers also signaled that they expect to make three quarter-point cuts to their benchmark interest rate next year, fewer than the five envisioned by financial markets and some economists. The relatively few number of rate cuts forecast for 2024 — which may not begin until the second half of the year — suggest that the officials think high borrowing rates will still be needed for most of next year to further slow spending and inflation.

Still, in a statement it issued after its 19-member policy committee met Wednesday, the Fed said that “inflation has eased over the past year, but remains elevated.” It was the first time since inflation first spiked that the Fed has formally acknowledged progress in its fight against accelerating prices.

The Fed also provided a hint that its rate cut efforts may be over, saying it is now considering whether “any additional” hikes are needed.

Wall Street traders, who tend to be more optimistic, have bet on four rate cuts, according to futures markets, down from a prediction of five a few weeks ago. Their hopes for cuts were fueled last month when Christopher Waller, a leading Fed official who had pushed for higher rates since inflation erupted in 2021, surprisingly suggested that the Fed might decide to cut rates as early as spring if inflation kept falling.

With inflation mostly easing now, that would be a lower bar for rate cuts than the most likely alternative scenario: A sharp economic slowdown that could prompt even faster rate reductions. So far, though, there is no sign that a downturn is imminent.

Rate cuts by the Fed would reduce borrowing costs across the economy, making mortgages, auto loans and business borrowing, among other forms of credit, less expensive. Stock prices could rise, too, though share prices have already rallied in expectation of rate cuts, potentially limiting any further increases.

Fed Chair Jerome Powell, though, has recently downplayed the idea that rate reductions are nearing. Powell hasn’t yet even signaled that the Fed is conclusively done with its hikes. Speaking recently at Spelman College in Atlanta, the Fed chair cautioned that “it would be premature to conclude with confidence” that the Fed has raised its benchmark rate high enough to fully defeat inflation. He also said it was too soon to “speculate” about rate cuts.

Still, when the Fed left rates unchanged Wednesday, as expected, it was the third straight time it has done so, lending weight to the widespread assumption that rate hikes are over. Beginning in March 2022, the Fed raised its key rate 11 times, to about 5.4%, the highest level in 22 years.

Typically, once the Fed has finished raising rates, attention quickly shifts to the question of when rate cuts will follow. Historically, on average, rate reductions have occurred less than a year after rate hikes have ended.

One reason the Fed might be able to cut rates next year, even if the economy plows ahead, would be if inflation kept falling, as expected. A steady slowdown in price increases would have the effect of raising inflation-adjusted interest rates, thereby making borrowing costs higher than the Fed intends. Reducing rates, in this scenario, would simply keep inflation-adjusted borrowing costs from rising.

Recent economic data have modestly cooled financial markets’ expectations for early rate cuts. Last week’s jobs report for November showed that the unemployment rate fell to 3.7%, near a half-century low, down from 3.9% as businesses engaged in solid hiring. Such a low unemployment rate could force companies to keep raising pay to find and retain workers, which would fuel inflationary pressures.

And consumer prices were mostly unchanged last month, the government said Tuesday, suggesting that while inflation is likely headed back to the Fed’s 2% target, it might take longer than optimists expect. The central bank, as a result, could opt to keep rates at their current level to try to ensure that prices resume their downward path.