Fed Revises Economic Forecast Downward

Washington, DC, February 21, 2008--The Federal Reserve has lowered its projection for economic growth this year due to the housing slump and credit crunch. It also expects higher unemployment and inflation this year.

"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the committee agreed that downside risks to growth would remain even after this action," according to minutes of the Fed's Jan. 29-30 meeting.

The Fed said that it believes gross domestic product will grow between 1.3 percent and 2 percent this year, lower than previous predictions 1.8 percent and 2.5 percent.

The Fed estimated that unemployment will rise to between 5.2 percent and 5.3 percent, up from 4.6 percent last year.

The Fed also expects inflation to be between 2.1 percent and 2.4 percent this year, up from previous projects of 1.8 percent to 2.1 percent.