The Latest on the Federal Reserve’s monetary policy meeting (all times local):
The Federal Reserve says it expects the economy will grow this year at a slightly faster pace than it projected in June. It has also trimmed its inflation forecast.
The Fed says in its latest quarterly economic projections that economic growth should reach 2.4 percent this year, up from a June forecast of 2.2 percent.
The central bank also expects inflation will remain stubbornly low. The Fed now projects it will be 1.9 percent by the end of 2018, a touch below its earlier forecast of 2 percent. That would mean inflation would fall short of the Fed’s 2 percent target for the sixth straight year.
Some Fed officials have questioned whether the central bank should continue raising rates, which it typically does to forestall inflation, at a time when price growth remains so low.
Federal Reserve policymakers say they still expect to hike short-term interest rates one more time this year and three times in 2018, if persistently low inflation rebounds.
They also have lowered their long-run forecast for the benchmark interest rate the Fed controls to 2.8 percent, down from 3 percent in a previous forecast in June. That suggests they expect growth to remain sluggish and inflation low, and therefore don’t need to raise rates as high to keep prices in check.
Fed officials say they also foresee a slightly slower path for rate hikes in 2019. They now expect there will likely be two hikes, down from three.
The Fed says it will start in October to gradually unwind its $4.5 trillion balance sheet, which expanded to unprecedented levels in efforts to spur economic growth after the 2008 financial crisis.
The balance sheet primarily consists of government and mortgage-backed bonds. As the bonds mature, the Fed plans to spend less money each month to replace them, which reduces the balance sheet. The U.S. central bank intends to spend $10 billion less on bonds beginning next month, a figure that will eventually reach $50 billion a month in October 2018.
Fed officials decided to keep their short-term benchmark rate between 1 percent and 1.25 percent. The Fed views the job market as strengthening, but it notes that inflation is running below its 2 percent annual target.
Still, the Fed said in a statement that prices for gasoline and other items might temporarily spike because of the damage caused by Hurricanes Harvey, Irma and…