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The Federal Reserve delivered an unexpected blow to hopes for lower borrowing costs in the future, projecting higher inflation and higher interest rates in updated forecasts released Wednesday. While policymakers left their benchmark rate unchanged and signaled that they may cut in the second half of this year, forecasts of officials showed they expect fewer cuts next year and the year after that. The central bank held the federal funds target at 4.25 to 4.50 percent, its level since the December rate cut. But the accompanying economic projections revealed rising concern that inflation is not receding fast enough—and that rates...

The Federal Reserve is expected to keep interest rates unchanged at the end of its two-day policy meeting on Wednesday, but policymakers may signal fresh monetary action in the next few months, perhaps in June. The Fed will issue its policy statement at 2 p.m. ET, along with new economic forecasts. Fed Chairwoman will hold a news conference at 2:30 p.m. The central bank raised rates for the first time in nearly a decade in December. But financial market turmoil, perhaps partially fueled by that December move, along with weaker economic data spurred policymakers to hold off on further tightening...

It looks like a continuation of the growth worries that have hampered markets for the last few months now," said Shane Oliver, head of investment strategy at AMP Capital in Sydney. "European and U.S. shares had sharp falls, after initially benign reactions to the Fed, and this is now flowing through to Asian markets today," he said. U.S. shares dropped more than 1.3 percent on Friday, after Fed Chair Janet Yellen said on Thursday that the global economic outlook appeared less certain. U.S. and European debt yields also tumbled, with the policy-sensitive two-year yield US2YT=RR falling to 0.678 after hitting...

Fed Approves Reduction in Discount Rate Friday August 17, 8:55 am ET By Martin Crutsinger, AP Economics Writer Federal Reserve Approves Half-Percentage Point Cut in Discount Rate on Loans to Banks WASHINGTON (AP) -- The Federal Reserve, declaring that increased economic uncertainty poses risks for U.S. business growth, announced Friday that it has approved a half-percentage point cut in its discount rate on loans to banks. The action was the most dramatic effort yet by the central bank to restore calm to global financial markets which have been roiled in the past week by a widening credit crisis. The decision...

Fed Seen Holding Rates SteadyWed January 29, 2003 12:17 AM ET By Joanne Morrison WASHINGTON (Reuters) - The prospect of an Iraq war and promise of new tax breaks will likely sway Federal Reserve policymakers into holding interest rates at four-decade lows when they end 2003's first rate-setting meeting on Wednesday. While a recent run of data has shown the U.S. economy remains in a rut with huge job losses, economists believe the central bank must hold off on rate cuts for now and wait out any uncertainties of war. "There are major concerns that war is coming and it...