The central bank said it now sees the economy growing at a rate between 1.3% to 2% this year, down from its previous forecast from October of growth between 1.8% and 2.5% for 2008.
The Fed also said it expects the unemployment rate for the year to be between 5.2% and 5.3%, up from the 4.8 % to 4.9% range previously given. Unemployment stood at 4.9% in January, according to the latest reading from the Labor Department.
In an attempt to ward off a recession, the Fed slashed rates by three-quarters of a percentage point on January 22 following an emergency meeting the day before and followed that with a half-point cut on January 30.
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Although this news is somewhat belated, it deserves some notice, with as large an impact it could have on the US economy. The Government is trying a few different approaches in fighting this recession. In this case, the central bank itself is getting involved by cutting interest rates and risking inflation in return for some way to reverse the newly announced “downturn.”
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