Fed cuts US economic forecasts for 2015

The Federal Reserve on Wednesday broadly lowered its outlook on the US economy this year, saying growth and inflation were slowing but the jobs market was expected to keep improving.

The Federal Open Market Committee, in a statement following a two-day meeting, said information since the January meeting suggested "economic growth has moderated somewhat."

The FOMC said that the labor market had made gains but inflation had declined further below its longer-run 2.0 percent target, largely due to falling energy prices. It held the key federal funds rate at the zero level, where it has been pegged since December 2008 to underpin the recovery from the Great Recession.

In an update of December projections released along with the FOMC statement, the Fed cut its estimate of 2015 gross domestic product growth by 0.3 percentage points, to a range between 2.3 percent and 2.8 percent. In 2014, the economy grew 2.4 percent.

The central bank's preferred measure of inflation, the personal consumption expenditures price index, was now seen at an annual rate of 0.6-0.8 percent this year, compared with the prior estimate of 1.0-1.6 percent.

Core PCE inflation, stripping out food and energy prices, was also expected to slow more than previously thought, to 1.3-1.4 percent compared with 1.5-1.8 percent in December.

According to the latest data, January PCE inflation was a slight 0.2 percent year-over-year and core PCE was 1.3 percent.

The labor market picture brightened. The Fed projected the unemployment rate this year would range between 5.0 percent and 5.2 percent; its prior estimate was 5.2-5.3 percent. In February, the jobless rate fell to 5.5 percent, the lowest level since May 2008, after a year of solid job gains.