WASHINGTON — The Federal Reserve says it will further slow the pace of its bond purchases because a strengthening U.S. job market needs less support. But it’s offering no clear signal about when it will start raising its benchmark short-term rate.
Most economists think a rate increase is at least a year away despite signs of rising inflation. In a statement after a meeting, the Fed is reiterating its plan to keep short-term interest rates low “for a considerable time” after it ends its bond purchases, which have been intended to keep long-term loan rates low.
The Fed also sharply cut its forecast for U.S. growth this year, reflecting a shrinking economy last quarter caused mostly by harsh weather.
At the same time, the Fed has barely increased its estimate of inflation despite signs that consumer price increases are picking up. The Fed’s benign inflation outlook suggests it doesn’t feel rising pressure to raise short-term interest rates.
The Fed expects growth to be just 2.1 percent to 2.3 percent this year, down from 2.8 percent to 3 percent in its last projections in March. It thinks inflation will be a slight 1.5 percent to 1.7 percent by year’s end, near its earlier estimate.