Investing.com - The Federal Reserve lowered expectations for rate hikes this year bringing their forecast more in line with market expectations as they held off on raising their policy rate at the latest Federal Open Market meeting on Wednesday.
As expected the Federal Open Market Committee left rates unchanged at the 0.25% to 0.50% range at the end of their two-day meeting, but made a few changes to the post-meeting statement and downgrades to their accompanying economic forecasts.
The FOMC removed any reference to the balance of risks in the statement, saying only "global economic and financial developments continue to pose risks."
Federal Reserve Chair Janet Yellen said Wednesday less tightening might be needed to achieve those conditions.
"Proceeding cautiously in removing policy accommodation at this time will allow us to verify that the labor market is continuing to strengthen, despite the risks from abroad," Yellen said in her press conference.
"Such caution is appropriate," Yellen continued, "given the short-term interest rates are still near zero, which means that monetary policy has greater scope to respond to upside than to downside changes in the outlook."
In the latest Summary of Economic Projections, Fed policymakers lowered their expectations for rate hikes this year bringing their forecast more in line with market expectations.
The median fed funds rate expected to be appropriate at the end of 2016 was lowered to 0.9% from 1.4%. This would imply a range of 0.75% to 1.00% at the end
of the year, or two more hikes compared to four expected in the December forecast.