The Federal Reserve meets this week for the last time in a year that has seen the central bank play a critical role in the U.S. economy and markets.

At this point last year, inflation was running at an annual pace of 6.5% and the Fed had just hiked interest rates for the fourth consecutive meeting to a level of 4.25%

Now, with the expectation the Fed will leave interest rates unchanged, the question is how soon it will start cutting rates. The answer, according to economists and market analysts, is sometime between March and May.

“The Federal Reserve is nearly assured to hold the federal funds target steady at a range of 5.25% to 5.50% at the last decision of the year on Wednesday, December 13,” Comerica Bank economists Bill Adams and Waran Bhahirethan wrote in a client note on Monday morning. “The Fed’s policy statement will likely acknowledge the recent decline of inflation (“progress” in returning inflation to their target) while repeating that they remain vigilant to the risk of inflation rebounding, and need more evidence that inflation is on a durable downward path before they are ready to start cutting rates.”

The Fed will also update its projections for the economy and inflation, as well as its “dot plot” of the individual forecasts of Fed policymakers. That should provide some clues as to whether the Fed is poised to reduce interest rates in 2024 and how quickly and aggressively.

“We expect the 2024 dot, currently at 5.125%, to decline 25 bps to 4.875% given that inflation has receded faster than the committee anticipated in September,” Sam Bullard, managing director and senior economist for Wells Fargo’s corporate and investment banking group, wrote on Sunday. “For 2025 and beyond, we suspect the median dots will be more or less unchanged.”

Meanwhile, the consumer price index for November will be released on Tuesday and the producer price index on Wednesday. Analysts predict the year-over-year numbers to come in at 3% and 1%, respectively.

The Fed is getting some help in the battle against inflation. Gas prices continue to fall, with the national average Monday sitting at $3.15, down from $3.38 a month ago. Apartment rents, meanwhile, have been falling.

At the same time, the labor market is holding up, with 199,000 jobs added last month and the unemployment rate ticking down to 3.7%. That gives credence to the chance of a “soft landing” for the economy.

The combination of economic reports last week led consumers to move their outlook into far more positive territory in the University of Michigan’s consumer sentiment survey for December, released on Friday. While the overall outlook for both the present and future economy improved sharply, inflation expectations for a year from now also declined significantly to 3.1% from 4.5% in November.

The shift in mood comes as the focus turns to 2024, in what will be an election year. The Fed likes to assert its political independence, meaning that if it plans to cut rates in 2024 it will likely want to start that process before the run of election activity begins in earnest with party conventions in the summer.

Another key piece of the economic pie will be retail sales for November, due out on Thursday. Those are likely to see some pullback from October when Americans took advantage of early sales but also reflect sales for the key Thanksgiving holiday period. Because retail sales are not adjusted for inflation, the drop in gasoline prices could negatively affect the top-line number.

For now, the markets are liking the trend line of inflation and economic growth. The S&P 500 rallied last week to a new 2023 high and is up nearly 20% for the year. Treasury yields, meanwhile, rose on Friday after the jobs report raised concerns the Fed may not move as quickly to cut rates as the market expects but have still come down from their highs of a few weeks ago. Mortgage rates have also fallen, with the 30-year fixed rate loan down to 7.34% from 8% in October.