US Fed slashes inflation forecast for 2015; sees stronger growth this year

Published January 08, 2015

The Federal Reserve has sharply cut its forecast for inflation next year, saying it will remain far below its 2 percent target through 2015.

The Fed now expects inflation to fall to between 1 percent and 1.6 percent in 2015, down from a previous forecast in September of 1.6 percent to 1.9 percent. The downgrade reflects plummeting oil and gas prices. The Fed kept its 2016 inflation forecast of 1.7 percent to 2 percent.

Policymakers have also boosted their forecasts for economic growth this year to as much as 2.4 percent, up from a previous estimate of 2 percent to 2.2 percent. That reflects strong growth of 4.3 percent from April through September, the healthiest pace in a decade.

The Fed updated its economic forecasts after a two-day policy meeting.

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