Goldman Sachs economists said they now expect the U.S. Federal Reserve to begin its interest rate-cutting cycle in the fourth quarter of next year, later than an earlier forecast of a cut in the second quarter.

The Fed on Wednesday kept its benchmark interest rate unchanged in the 5.25% - 5.5% range and its projections showed that it now expected to cut only by 50 basis points next year, down from a full percentage point cut estimated earlier.

"Today, participants appeared to move away from the view that monetary policy tightening could weigh on growth with a long lag next year, which weakens one argument for cutting," Goldman Sachs economists led by Jan Hatzius said in a note.

"We think this means that inflation will have to fall further than we previously assumed for the FOMC to cut."

Barclays expects a cut in each of the Fed's last three meetings of 2024. Morgan Stanley, meanwhile, still expects the first rate cut to be delivered in March next year.

The central bank's quarterly projections showed the rate may still be lifted one more time this year to a peak 5.50%-5.75% range.

While Goldman and Morgan Stanley do not expect another rate hike this year, Barclays, BofA and Citigroup see the Fed delivering another 25 basis points raise in the November meeting.

(Reporting by Susan Mathew in Bengaluru; Editing by Nivedita Bhattacharjee)