WASHINGTON — The Federal Reserve Board announced yesterday that its policymakers had “considerably” lowered their forecast for 2008 economic growth and sharply increased their unemployment projection, while increasing their core inflation forecast “only moderately” at the April 30 Federal Open Market Committee meeting.

Minutes of the meeting, where the FOMC cut the federal funds rate another 25 basis points to 2%, show most members believed risks to economic growth were still “skewed to the downside.” But the committee agreed not to explicitly say so in its rate announcement in the belief that the Fed’s collective monetary and liquidity measures had rendered downside risks to growth “more closely balanced by the risks to inflation.”

Both the minutes and the projections reflect a good deal of uncertainty and division about the outlook in a climate of continued financial turbulence, and the minutes frankly say that the appropriate stance of monetary policy was difficult to gauge.

However, despite these doubts and differences, the majority’s continuing emphasis on downside risks is reflected not only in the minutes but in the FOMC’s projections of growth, unemployment, and inflation over the next three years.

— Market News International


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