The Federal Reserve continued to reduce its monthly bond-buying program and held interest rates near zero even as it debated persistent conflicting signals in the economy.
In addition to continuing the scaleback of its monthly money-printing efforts, the Fed slashed its outlook for full-year economic growth, cutting gross domestic product from a 2.8 percent to 3 percent range expressed in March down to 2.1 percent to 2.3 percent. The change comes on the heels of a 1 percent drop in first-quarter GDP.
It also modestly lowered its unemployment rate expectations, from 6.1 percent to 6.3 percent—its current level—down to 6.0 to 6.1 percent.
Inflation projections remained relatively stable, from 1.5 percent to 1.6 percent, adjusting it just a notich to 1.5 percent to 1.7 percent.
Central bank officials on the Open Market Committee kept their accommodative stance even as they voted to cut quantitative easing from $45 billion to $35 billion a month. The committee said the economy “had rebounded” in recent months, with the labor market showing “further improvement” though unemployment “remains elevated,” consistent with language it has used for most of its recent reports.
Economists expected the Fed to keep short-term interest rates near zero while reducing its bond-buying program to $35 billion a month.