FILE - In this Thursday, March 23, 2017, file photo, Federal Reserve Chair Janet Yellen steps offstage after speaking at the Federal Reserve System Community Development Research Conference in Washington. There isn’t much suspense about what the Fed will announce when its latest policy meeting ends: That it’s raising its key short-term rate for the third time in six months. But anticipation surrounds the possibility that the Fed could signal policy shifts in a statement it will issue, in updated economic forecasts and in a news conference with Yellen. (AP Photo/Cliff Owen, File)

The Latest: Fed cuts inflation, unemployment rate forecasts

June 14, 2017 - 2:09 pm

WASHINGTON (AP) — The Latest on the Federal Reserve's monetary policy meeting (all times local):


2:05 p.m.

Federal Reserve policymakers lowered their forecasts for inflation and unemployment, and continued to predict they would raise rates once more this year.

Fed officials now expect the U.S. unemployment rate to end the year at 4.3 percent, down from the 4.5 percent they predicted in March. They are just catching up with reality: The jobless rate has dropped with unexpected speed — to a 16-year-low 4.3 percent in May.

The policymakers now expect their favored measure of inflation to come in at 1.6 percent this year, down from the 1.9 percent they expected in March and below their 2 percent target. Annual inflation is running at 1.7 percent.

They increased their projections for economic growth this year to 2.2 percent from the 2.1 percent they forecast in March. They continue to expect the economy to grow 2.1 percent next year and 1.9 percent in 2019. These rates are well below the Trump administration growth goals of 3 percent a year.

The Fed raised the short-term rate it controls to a range of 1 percent to 1.25 percent, the second hike this year and the third in six months. The policymakers signaled that they still expect to raise rates once more in 2017.


2:00 p.m.

The Federal Reserve is hiking a key interest rate for the second time this year and is planning to reduce the size of its $4.5 trillion balance sheet as well.

Fed officials voted 8-1 to raise the federal funds rate to a range of 1 to 1.25 percent. The rate sets what banks can charge each other for overnight loans and influences the availability and flow of money in the U.S. economy. Only Neel Kashkari, president of the Minneapolis Fed bank, opposed the increase.

The Fed also says it expects to begin reducing its balance sheet this year "provided the economy evolves broadly as anticipated." This would reduce its holdings of Treasury and mortgage-backed bonds, which they acquired in the wake of the financial crisis to support economic growth. Fed officials project growth of roughly 2 percent in 2017.


1:00 p.m.

The Federal Reserve is expected to announce plans to lift a key interest rate at 2 p.m. Eastern time.

Fed officials are wrapping up their two-day June meeting. Most analysts believe the Fed will raise the federal funds rate — what banks charge each other for short-term loans — for the second time this year. Fed officials previously increased the rate in March to a range of 0.75 to 1 percent. There was only one rate increase in both 2015 and 2016.

Financial markets have been anticipating the increase. U.S. stock markets were relatively flat through afternoon trading, while the yields on 10-year Treasury notes had fallen to 2.11 percent.


4:35 a.m.

World stock markets and the dollar are firm ahead of an expected interest rate increase by the U.S. Federal Reserve.

Germany's DAX index is up 0.4 percent and Britain's FTSE 100 0.1 percent. In Asia, Japan's Nikkei 225 ended the day marginally lower. Some gains are expected on Wall Street later, with the futures for both the Dow and S&P 500 up 0.1 percent.

In currency markets, the dollar is up to 110.22 yen from Tuesday's 110.04 yen. It is roughly flat against the pound, at $1.2758.

The U.S. central bank is widely predicted to nudge up its benchmark rate by a quarter point on Wednesday, to a range of 1 percent to 1.25 percent.

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