Fed ups its GDP forecast for 2019 slightly to 2.2%

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The Eccles Building, location of the Board of Governors of the Federal Reserve System and of the Federal Open Market Committee, June 2, 2016 in Washington, DC.

Brooks Kraft | Getty Images

The Federal Reserve dialed up its growth expectations slightly while keeping its inflation projection unchanged, according to its Summary of Economic Projections.

Source: Federal Reserve

The central bank now expects GDP to grow at a 2.2% pace for 2019, versus the 2.1% forecast in June. The unemployment rate is expected to rise to 3.7% this year, slightly above the 3.6% projection in June.

The GDP outlook for 2020 stayed unchanged at 2%.

The Fed still expects the headline inflation to grow at 1.5% this year, while its expectations for core inflation, which excludes volatile food and energy prices, stayed at 1.8%.

The Federal Open Market Committee approved a much-anticipated quarter-point interest rate cut on Wednesday, taking down its benchmark overnight lending rate to a target range of 1.75% to 2%. The Fed sees no further rate cuts in 2019 and 2020, but policymakers are divided in its rate outlook.

The economy grew at a 2.0% annualized rate in the second quarter, slower than a 3.1% growth in the January-March quarter. The unemployment rate stayed at a historic low of 3.7% in August.

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