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US Federal Reserve Revises Down Economic Growth Projections Due to Tariff Ambiguities
The central bank has revised down 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 raising its inflation projections.
The central bank now anticipates that the US gross domestic product (GDP) will grow by 1.7% this year, down from its previous estimate of 2.1% made in December.
Furthermore, policymakers are forecasting inflation to rise at an average rate of 2.7% this year, an increase from the earlier 2.5%.
Following its recent policy meeting, the Fed has kept the benchmark interest rate steady at between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that there could be two rate cuts 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 some of the rise 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 highest levels, it still exceeds the target.
The decision by the US Federal Reserve comes as the Bank of England is anticipated to maintain UK interest rates at 4.5%.
The announcement has resulted in a modest impact 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 grow by 1.7% this year, down from its previous estimate of 2.1% made in December.
Furthermore, policymakers are forecasting inflation to rise at an average rate of 2.7% this year, an increase from the earlier 2.5%.
Following its recent policy meeting, the Fed has kept the benchmark interest rate steady at between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that there could be two rate cuts 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 some of the rise 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 highest levels, it still exceeds the target.
The decision by the US Federal Reserve comes as the Bank of England is anticipated to maintain UK interest rates at 4.5%.
The announcement has resulted in a modest impact on financial markets, with Wall Street experiencing a slight uptick following the news.
