The Federal Reserve yesterday updated its economic forecasts for the remainder of the year, and the first quarter's disastrous GDP number - the economy contracted by 1 percent - forced a revision of its estimate of 2014's growth. Rather than the 3 percent estimate the Fed offered last March, it now thinks the economy will grow by 2.2 percent this year. But the estimates for future years remain unchanged: 3.0 percent to 3.2 percent growth in 2015, and 2.5 percent to 3 percent growth in 2016.
The Fed also forecast when interest rates would likely start to rise. It estimated that the benchmark federal-funds rate would rise from near zero today to 1.2 percent by the end of 2015 and 2.5 percent by the end of 2016. As of March, the Fed had estimated those figures at 1.125 percent in 2015 and 2.4 percent in 2016.
On unemployment, the Fed expects joblessness to continue to drop. They forecast that the jobless rate would falling from the current 6.3 percent to 6 percent or 6.1 percent by the end of the year-end, and to the mid 5 percent range in 2015.
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