Federal Reserve officials are more upbeat about the prospects for employment for the rest of this year but foresee higher inflation than they did at the start of the year.
In an updated forecast, the Fed on Wednesday projected the economy will grow between 3.1 percent and 3.3 percent this year. That's a downward revision from their last forecast, which saw growth possibly as high as 3.9 percent this year. The new forecast reflects slower growth in the first three months of this year because of higher energy costs.
The Fed's latest outlook foresees lower unemployment than was expected in January. The unemployment rate, which stood at 9.8 percent in November, has fallen to 8.8 percent. The Fed's new forecast projects the unemployment rate will fall to between 8.4 percent and 8.7 percent by the end of the year.
Because of the higher energy costs, the Fed says a key measure of consumer inflation will rise by 2.1 percent to 2.8 percent this year, up from a January forecast of 1.3 percent to 1.7 percent increase in inflation.
The central bank revises its economic outlook four times a year. Normally, the revised forecast is released at the time the Fed releases the minutes of the meeting, which occurs three weeks after the meeting.
However, in a bid for more openness, the Fed on Wednesday instituted a new procedure where the forecasts will be released at the conclusion of the Fed meeting.