0:00
0:00
US Federal Reserve Reduces Economic Growth Projection Due to Tariff Uncertainties
The central bank has lowered its forecasts for US economic growth while raising its projections for price increases, attributing the changes to heightened uncertainty stemming from trade policies.
The US Federal Reserve has lowered its projection for the US economic growth while raising its forecast for inflation.
The central bank now anticipates that the US gross domestic product (GDP) will grow by 1.7% this year, down from its earlier estimate of 2.1% made in December.
Moreover, policymakers expect inflation to rise at an average rate of 2.7% this year, an increase from the previously projected 2.5%.
Following its most recent policy meeting, the Fed has kept the benchmark interest rate steady between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that rates may be reduced twice during this year.
The heightened uncertainty regarding the economic outlook is linked to trade policies, including tariffs enacted by the US government.
The Fed chair indicated that a portion 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 peak, it continues to exceed this target.
The US Federal Reserve's announcement comes as the Bank of England is anticipated to maintain UK interest rates at 4.5%.
This news has had a modest effect on financial markets, with Wall Street experiencing a slight uptick following the announcement.
The central bank now anticipates that the US gross domestic product (GDP) will grow by 1.7% this year, down from its earlier estimate of 2.1% made in December.
Moreover, policymakers expect inflation to rise at an average rate of 2.7% this year, an increase from the previously projected 2.5%.
Following its most recent policy meeting, the Fed has kept the benchmark interest rate steady between 4.25% and 4.5%.
A closely monitored 'dot plot' suggests that rates may be reduced twice during this year.
The heightened uncertainty regarding the economic outlook is linked to trade policies, including tariffs enacted by the US government.
The Fed chair indicated that a portion 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 peak, it continues to exceed this target.
The US Federal Reserve's announcement comes as the Bank of England is anticipated to maintain UK interest rates at 4.5%.
This news has had a modest effect on financial markets, with Wall Street experiencing a slight uptick following the announcement.
