US Fed sees unemployment falling further before spurring inflation

Economic IndicatorsAssociated Press

The Federal Reserve forecasts that the U.S. unemployment rate can now fall further without spurring inflation, a sign that it may move slowly in raising interest rates.

Fed officials reduced their estimate of the unemployment rate that they think is consistent with a healthy economy to a range of 5 percent to 5.2 percent. That is down from a previous range of 5.2 percent to 5.5 percent. Unemployment now stands at 5.5 percent, the top of the previous range.

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The Fed also sharply reduced its forecasts for economic growth through 2017 from its December projections. It now expects just 2.5 percent growth this year and next, down from 2.8 percent and 2.75 percent, respectively. Growth will then slow to 2.2 percent in 2017, the Fed predicts, down from 2.4 percent.