Fed sees slower growth for year despite rebound

[WASHINGTON] The Federal Reserve said on Wednesday that economic growth had rebounded after a nasty winter even as it slashed its economic forecast for this year to reflect the unexpected contraction during the early months of the year.

In a show of confidence that the winter was an aberration, the Fed also continued to retreat from its economic stimulus campaign. As expected, it announced that it would reduce its monthly bond purchases by US$10 billion to US$35 billion beginning next month, and that it still expects to stop expanding its holdings later this year.

"Growth in economic activity has rebounded in recent months," the Fed said in a statement after a two-day meeting of its policymaking committee. It said that labour markets, household spending and business investment all were improving.