The Fed’s released its interest rate decision on Wednesday. The Fed kept its interest rate unchanged at 0.25% – 0.50% as widely expected by analysts. The Fed reviewed its interest rate forecasts. The Fed said at its March monetary policy meeting that interest rate will be 1.00% by the end of the year, down from 1.50% in December. It means that Fed officials expect the Fed to raise its interest rate twice this year. The Fed expects its fed-funds rate to be 1.7% by the end of 2017, down from its previous estimate of 2.375%, and 3.00% by the end of 2018, down from its previous estimate of 3.25%.
The Fed cut its growth and inflation forecasts. The U.S. economy is expected to expand 2.2% this year, down from the previous estimate of 2.4%, while inflation is expected to be 1.2%, down from the previous estimate of 1.6%.
The Fed said in its statement that the U.S. economy expanded moderately, household spending rose moderately, the labour market continued to strengthen, while inflation increased in recent months but remained below the Fed’s 2% target. The Fed said that there were risks to the U.S. economy from the global economic and financial developments.
Comments by the Fed Chairwoman Janet Yellen were “dovish”. She noted that low oil prices continued to weigh on inflation. Yellen pointed out that the Fed was not considering negative interest rates but was analysing their effects in other countries.
The Fed chairwoman also said that an interest rate hike in April was possible.
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