The Latest: Fed officials see lower unemployment rate
WASHINGTON (AP) — The latest on the U.S. Federal Reserve's two-day policy meeting, which ended Wednesday. The central bank kept interest rates steady amid uncertainty about the global economy and financial markets. (All times local)
Federal Reserve policymakers have a slightly more optimistic view of the unemployment rate for the next few years than they did just a few months ago.
Fed officials now see the rate falling to 4.6 percent by the end of 2017 and 4.5 percent by the end of 2018. Both figures are one-tenth of a percentage point lower than in their December forecasts. The figure now stands at 4.9 percent, and officials see it ticking down two-tenths of a point by the end of this year.
All those figures are below their estimate of the long-term unemployment rate consistent with a normal economy, which is 4.8 percent. Forecasting a rate that is lower than the long-term average suggests that Fed policymakers hope the economy is strong enough to push the rate below normal. That could force employers to offer higher pay and accelerate growth.
The Federal Reserve is keeping short-term interest rates unchanged at a range between 0.25 percent and 0.5 percent, citing the risks posed by global economic and financial turmoil.
Fed officials also see just two rate hikes this year, according to their latest projections, down from a previous estimate in December of four increases. The reduced number of hikes suggests Fed policymakers have grown more cautious in the wake of weaker growth overseas and gyrating financial markets.
The Fed raised the short-term rate it controls in December from nearly zero for the first time in almost a decade. Most economists forecast before the meeting that the Fed would raise rates only twice this year.
Markets are awaiting the Federal Reserve's latest policy statement due out at 2 p.m. Stocks have been relatively quiet following a raft of generally positive economic reports in the morning. The data may reassure Fed officials that the U.S. economy is still growing despite weakness overseas.
Manufacturing output ticked up in February, its second straight increase. Builders broke ground on more houses and apartments. And consumer prices, excluding the volatile food and energy categories, have increased 2.3 percent in the past year, the most in more than two years. Inflation typically rises when the economy is growing.
The Dow Jones industrial average was down 25 points to 17,225.23 as of 12:55 p.m. Eastern time. The Standard & Poor's 500 index and Nasdaq composite index were both flat.
Global financial markets are in a wait-and-see mode ahead of a statement Wednesday from the U.S. Federal Reserve policy and comments from Chair Janet Yellen.
Markets tend to swing more forcefully after the Fed updates its economic forecast, said Deutsche Bank analyst Alan Ruskin.
According to Ruskin, market movements after the Fed statement "vastly exceed" even days when the Labor Department releases jobs numbers.
Futures markets point to a fairly flat open in the U.S., with the S&P 500 index set for a 0.1 percent drop at the bell. Futures do not always foretell what markets will do. In the currency markets, the dollar traded in a fairly narrow range.
Investors are cautious with the U.S. Federal Reserve wrapping up its two-day meeting. They are looking for hints as to when the central bank might raise interest rates again.
The Fed is expected to keep rates on hold Wednesday, but it will issue a statement, update its economic forecasts and Chair Janet Yellen will speak.
In December, the Fed raised its benchmark rate for the first time in nearly a decade. But volatility in financial markets and a slowdown in global economic growth have since then raised concern that the U.S. economy might not be strong enough to handle another rate increase now.
Rate increases can weigh on stocks because they make borrowing marginally more expensive, and that has the potential to slow economic activity.
In European trading, Germany's DAX rose 0.5 percent. Japan's Nikkei is down 0.83 percent. Dow and S&P 500 futures are essentially flat.