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Rate rises appear to be off the table

The Federal Reserve painted a far less rosy economic picture than the White House as it left interest rates unchanged yesterday, and signaled little appetite for any raises in the near future, Jim Tankersley of the NYT writes.

Growth appears to be slowing from last year, Jay Powell, the Fed chairman, said. That’s a result of the trade war, economic slowdowns in Europe and China and fading stimulus from the 2017 tax cuts. The central bank now expects 2.1 percent growth this year, down from its 2.3 percent forecast in December — and more than a percentage point less than the 3.2 percent the White House predicts.

Rate hikes seem to be off the table. Forecasts show that Fed officials broadly expect not to raise rates at all this year, with a single rate increase in 2020 and none in 2021. In December, they expected two rate increases this year and another in 2020.

“The Fed is effectively giving Mr. Trump what he wants from monetary policy, but with a twist,” Mr. Tankersley writes. “The president has publicly pushed Mr. Powell to stop raising rates. But if the Fed is correct and growth falls well below 3 percent this year, without a single rate increase, it will be difficult for Mr. Trump to pin the blame on Mr. Powell.”