Fed revises 2008 growth downwards
( dpa ) - The US Federal Reserve on Wednesday lowered its forecast for growth in 2008 for the second time amid fears that the US economy may have already entered a recession.
The US central bank cut its growth forecast to between 1.3 and 2 per cent, down from a projection of 1.8 to 2.5 per cent in October. In June, shortly before a crisis broke out in the US housing and credit sectors, the Fed predicted growth between 2.5 and 2.75 per cent.
The Fed attributed the revised estimate to further write-downs by banks and a still shaky credit market, as well as plummeting housing prices, "turmoil" in financial markets and high energy prices.
But it noted that a 150-billion-dollar stimulus package passed by Congress this month may yet help boost economic growth in the second half of the year. The Fed slashed interest rates by 1.25 points to 3 per cent last month in an effort to stave off a possible recession.
The newly released projections came from a January 29-30 meeting of the Fed's Board of Governors.