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Federal Reserve cuts US economic forecasts for 2015
[WASHINGTON] The Federal Reserve on Wednesday broadly lowered its outlook on the US economy this year, saying growth and inflation were slowing but the jobs market was expected to keep improving.
The Federal Open Market Committee, in a statement following a two-day meeting, said information since the January meeting suggested "economic growth has moderated somewhat."
The FOMC said that the labour market had made gains but inflation had declined further below its longer-run 2.0 per cent target, largely due to falling energy prices. It held the key federal funds rate at the zero level, where it has been pegged since December 2008 to underpin the recovery from the Great Recession.
In an update of December projections released along with the FOMC statement, the Fed cut its estimate of 2015 gross domestic product growth by 0.3 percentage points, to a range between 2.3 per cent and 2.8 per cent. In 2014, the economy grew 2.4 per cent.
The central bank's preferred measure of inflation, the personal consumption expenditures price index, was now seen at an annual rate of 0.6-0.8 per cent this year, compared with the prior estimate of 1.0-1.6 per cent.
Core PCE inflation, stripping out food and energy prices, was also expected to slow more than previously thought, to 1.3-1.4 per cent compared with 1.5-1.8 per cent in December.
According to the latest data, January PCE inflation was a slight 0.2 per cent year-over-year and core PCE was 1.3 per cent.
The labour market picture brightened. The Fed projected the unemployment rate this year would range between 5.0 per cent and 5.2 per cent; its prior estimate was 5.2-5.3 per cent. In February, the jobless rate fell to 5.5 per cent, the lowest level since May 2008, after a year of solid job gains.