Fed dims economic outlook, predicts no rate hikes this year

Mr Powell says there has been "data arriving since September suggesting that growth is slowing somewhat more than expected".THE Federal Reserve does not expect to raise the benchmark lending rate again this year, according to a closely-watched forecast released Wednesday, a surprising sign the US economy is slowing.

The explanation can be found in the stark change in language in the statement from the FOMC, which voted unanimously to keep the key rate unchanged at 2.25 to 2.5 per cent, and which reflects the slowdown in the world's largest economy. Mr Powell explained the about-face, which he called a"wait-and-see approach", saying that, while fiscal stimulus boosted the economy in 2018, there has been"data arriving since September suggesting that growth is slowing somewhat more than expected". And while"developments at home and around the world bear close attention", he told reporters the Fed's outlook"is a positive one". The committee members forecast a median federal funds rate this year of 2.

As at Wednesday morning, futures markets put the odds of a rate cut in the next 10 months at about one in three. The central bank in January pledged to revisit the process after financial markets late last year were thrown into turmoil in part because of concerns the Fed was too rigid in the"balance sheet normalisation" plan.

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