Officials at the US Federal Reserve have scaled back forecasts about how much they are likely to raise borrowing costs this year. They say the weaker global growth picture is changing their calculations.
For now the US Federal Reserve is not raising its major lever for borrowing costs, known as the Federal Funds Rate. It will stay at a range of a quarter to a half percent, meaning continued low dollar borrowing costs. On top of that they are forecasting a slower pace of rate rises this year, from four down to two hikes in 2016.
The forecasts come despite continued improvements in the US jobs market and some signs that inflation is beginning to rise. Chair Janet Yellen says officials are acting cautiously because of risks emanating from the global economy.
By the end of this year the Fed officials expect rates to be raised by only an additional half percentage point and a continued gradual ramp up pattern in 2017.