Fed Cuts GDP View, Raises Inflation Outlook

FOXBusiness

The Federal Reserve's view on the pace of economic recovery has dulled slightly, according to a statement issued on Wednesday.

The central bank cut its view of 2011 gross domestic product growth to a range of 2.7% to 2.9% from the 3.1% to 3.3% offered in April. The outlook for 2012 was also lowered, and the Feds estimate for inflation was raised.

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The Fed said in a prior statement that it does expect the pace to pick up again in coming quarters.  Temporary factors, such as high food and energy prices and supply-chain disruptions associated with the earthquake that slammed Japan, have weighed on economic growth, according to the Fed.

Inflation, the Fed notes, has increased in recent months, but the central bank believes inflation expectations remain stable.  Generally, economists look to inflation expectations and not inflation readings themselves because increases in expectations are significantly more challenging to control.

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