Economic growth rates in the United States have been slashed
by the Federal Reserve after officials took into account the
sour start to the year, when severe winter weather crippled
activity in major centres.
After a two-day policy meeting, the central bank cut its
forecasts for economic growth this year to between 2.1% and
2.3% from an earlier projection of around 2.9%.
But the Fed's forecasts for 2015 and 2016 were unchanged and
it expressed confidence the recovery was on track.
New Zealand's economic growth for the 12 months ended March
was 3.8%, and growth was expected to peak at 2.8% in the year
US stocks rallied, gaining the most in four weeks, after Fed
chairwoman Janet Yellen signalled there was no hurry to raise
interest rates from their current near-zero rate.
Dr Yellen's policy statement changed little from the one
issued after the meeting in April, repeating that interest
rates would remain near zero ''for a considerable time''
after the bond buying ended.
Unemployment remained elevated, despite recent job growth,
and Dr Yellen noted the Fed's preferred measure of inflation
was still running below its 2% target.
Craigs Investment Partners broker Chris Timms said the Fed
hinted at a slightly faster pace of interest rate increases
next year but suggested benchmark borrowing costs in the
long-run would be lower than previously indicated.
As widely expected, the Fed pushed ahead with its plans to
wind down one of its main stimulus programmes - reducing its
monthly asset purchases from $US45 billion ($NZ51.7 billion)
to $US35 billion.
Among 16 individual rate-rise projections, the median
interest rate was tipped to reach 1.125% by the end of 2015.
Officials projected a slightly more aggressive path of
interest rate hikes for the following year, with the year-end
median placed at 2.5% versus 2.25% in March.
''Importantly, Fed officials also lowered their projections
for long-term interest rates, a potential sign of reduced
confidence in the economy's long-run potential,'' Mr Timms