Fed Sees Economic Slowdown

NEW YORK (CNNMoney.com) -- The Federal Reserve cut its growth forecast for the economy and said it sees higher unemployment for the rest of 2008.
The central bank said it now sees the economy growing at a rate between 1.3 to 2% this year, down from its previous forecast from October of growth between 1.8% and 2.5% for 2008.
The Fed also said it expects the unemployment rate for the year to be between 5.2% and 5.3%, up from the 4.8 % to 4.9% range previously given.
This gloomier forecast, which was hinted at by Federal Reserve Chairman Ben Bernanke in testimony to the Senate Banking Committee last week, was released along with the minutes from the Fed's two meetings it held in January.
The Fed slashed interest rates twice last month in an attempt to ward off a recession. It cut rates by three-quarters of a percentage point on January 22 following an emergency meeting the day before and followed that with a half-point cut on January 30.
According to the minutes from the emergency meeting, at least one member argued the Fed should wait until its regularly scheduled meeting later that month to announce a rate cut.
"Some concern was expressed that an immediate policy action could be misinterpreted as directed at recent declines in stock prices, rather than the broader economic outlook," read the minutes.
This meeting took place while U.S. markets were closed for the Martin Luther King, Jr. holiday. But overseas markets were experiencing a steep sell-off that day, fueling fears that stocks would plunge on Wall Street when the U.S. markets resumed trading on January 22.