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US Federal Reserve Downgrades Economic Growth Outlook Due to Tariff Uncertainty
The central bank has lowered its forecasts for US economic growth while raising its projections for price growth, attributing the changes to heightened uncertainty stemming from trade policies.
The US Federal Reserve has downgraded its forecast for the country's economic growth while revising its expectations for inflation upward.
The central bank now anticipates that the US gross domestic product (GDP) will increase by 1.7% this year, a decrease from its earlier projection of 2.1% in December.
Moreover, policymakers expect inflation to rise at an average rate of 2.7% this year, up from a previous estimate of 2.5%.
Following its latest policy meeting, the Fed has kept the benchmark interest rate steady between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that cuts to rates could occur twice within this year.
The heightened uncertainty regarding the economic outlook is linked to trade policies, including tariffs enacted by the US administration.
The Fed chair remarked that part of the increase in inflation expectations can be attributed to these tariffs.
The central bank aims for a 2% inflation rate, and although price growth has decreased from its peak, it still exceeds the target.
The Fed's decision coincides with the Bank of England's anticipated decision to maintain UK interest rates at 4.5%.
The announcement has had a moderate effect on financial markets, with Wall Street experiencing a slight uptick following the news.
The central bank now anticipates that the US gross domestic product (GDP) will increase by 1.7% this year, a decrease from its earlier projection of 2.1% in December.
Moreover, policymakers expect inflation to rise at an average rate of 2.7% this year, up from a previous estimate of 2.5%.
Following its latest policy meeting, the Fed has kept the benchmark interest rate steady between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that cuts to rates could occur twice within this year.
The heightened uncertainty regarding the economic outlook is linked to trade policies, including tariffs enacted by the US administration.
The Fed chair remarked that part of the increase in inflation expectations can be attributed to these tariffs.
The central bank aims for a 2% inflation rate, and although price growth has decreased from its peak, it still exceeds the target.
The Fed's decision coincides with the Bank of England's anticipated decision to maintain UK interest rates at 4.5%.
The announcement has had a moderate effect on financial markets, with Wall Street experiencing a slight uptick following the news.
