The indication from the Federal Reserve to likely pause interest rate increases is sure to please President Donald Trump, who railed against the central bank for its campaign of rate hikes last year. | Justin Sullivan/Getty Images Finance Federal Reserve, rejecting Trump's growth forecast, confirms rate-hike pause

The Federal Reserve sent a clear signal Wednesday that it’s unlikely to raise interest rates at all this year, a striking change from December when central bank officials judged that two more hikes might be necessary in 2019.

That message is certain to please President Donald Trump, who last year repeatedly bashed the Fed for its steady campaign of rate increases. What bodes less well for Trump is that the central bank downgraded its estimate for rate hikes because it expects slower economic growth.


The Fed did not announce any rate moves on Wednesday.

Fed officials project that the U.S. economy will grow by 2.1 percent this year, down from their 2.3 percent prediction in December. That outlook clashes with the optimistic growth forecast put forward just the day before by White House economists, who projected that gross domestic product would expand at or above 3 percent for the next five years, citing a pickup in business investment after the 2017 corporate tax cuts.

The Fed doesn't share that analysis.

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“The labor market remains strong but … growth of economic activity has slowed from its solid rate in the fourth quarter,” Fed policymakers said in a statement after two days of meetings this week. “Recent indicators point to slower growth of household spending and business fixed investment in the first quarter.”

Fed Chairman Jerome Powell was asked at his post-meeting press conference about the disparity between the White House and Fed forecasts. He said he hadn’t seen the administration's projections but called for policies that would bring more workers into the labor force.

Since the Fed last raised rates in December, Powell and other officials have emphasized that the central bank would be "patient" in judging the need for more increases, citing slowing global growth and trade tensions. They stuck to that mantra on Wednesday.

“Patient means we see no need to rush to judgment,” Powell said. “It may be some time before the outlook for jobs and inflation calls clearly for a change in policy.”

No Fed officials indicated that they expect the central bank to cut interest rates in the next couple of years.

Notably, Powell has strongly cautioned against reading too much into the Fed’s projections for future rate moves, particularly given officials’ uncertainty about how the economic outlook will evolve. Central bank officials put forward estimates about future rate moves based on the most likely path of the economy but do not individually outline what type of risks might put the economy on a different course.

Powell at his press conference cast the economic picture as an overall positive one but said growth “is slowing somewhat more than expected.”

The Fed also announced a plan to stop shrinking its massive stockpile of Treasury bonds and bundled mortgages, bought in the wake of the 2008 financial crisis to spur the economy and the housing market. That reduction has had the effect of tightening credit conditions, alongside the rate hikes.

The central bank said it would start to slow the pace of its balance sheet reduction in May and then stop shrinking the overall size of its holdings altogether in September. However, it will continue allowing mortgage-backed securities to roll off its balance sheet and move toward its long-term goal of holding a more conventional balance sheet of primarily Treasuries.