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US central bank cuts growth forecast for 2014 | US central bank cuts growth forecast for 2014 |
(31 minutes later) | |
The US Federal Reserve has cut its growth forecast for 2014 due to the harsh winter weather. | The US Federal Reserve has cut its growth forecast for 2014 due to the harsh winter weather. |
The central bank is now predicting growth of between 2.1% and 2.3% for this year, down from its March forecast of 2.8% to 3%. | The central bank is now predicting growth of between 2.1% and 2.3% for this year, down from its March forecast of 2.8% to 3%. |
However in its accompanying statement, the bank said that economic activity had "rebounded in recent months". | |
As expected, it has also trimmed back its stimulus programme by $10bn a month to $35bn. | As expected, it has also trimmed back its stimulus programme by $10bn a month to $35bn. |
The central bank has been buying bonds to keep long-term interest rates low and encourage banks to lend. | The central bank has been buying bonds to keep long-term interest rates low and encourage banks to lend. |
This is the fifth cut in purchases since December and it is expected to stop buying bonds altogether by the autumn. | |
However chairman Janet Yellen stressed that this was not a pre-set programme and if necessary it would change course. | |
The Federal Reserve expects growth to pick up again in 2015, sticking to a prediction of 3% to 3.2% expansion. | |
"Economic activity will expand at a moderate pace and labor market conditions will continue to improve gradually," the central bank said. | |
"Household spending appears to be rising moderately and business fixed investment resumed its advance." |