Fed scales back rate rise forecasts: leaves rates unchanged

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Federal Reserve officials held off from raising Fed Funds rate and scaled back forecasts for future rate increases this year, citing the potential impact from weaker global growth and financial-market turmoil on the U.S. economy.

The Federal Open Market Committee kept the target range for the benchmark federal funds rate at 0.25 percent to 0.5 percent. Implications are two quarter-point increases this year, down from four forecast in December.

“The committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will expand at a moderate pace and labor market indicators will continue to strengthen,” the FOMC said. “However, global economic and financial developments continue to pose risks.”

Slower Pace

Weaker-than-expected global growth has clouded the U.S. outlook and led investors to expect a slower pace of tightening since the Fed raised rates in December for the first time in almost a decade. Yellen said in February that market turbulence had “significantly” tightened financial conditions by pushing down stock prices, causing the dollar to strengthen and boosting some borrowing costs.