WASHINGTON, March 19, 2014 (AFP) – New Federal Reserve chief Janet Yellen kept the central bank firmly on the path set by predecessor Ben Bernanke Wednesday, shrugging off recent economic weakness as largely weather-caused. The Fed slightly cut its forecast for economic growth, trimming the high end of the ranges by 0.2 percentage point to 2.8-3.0 percent in 2014 and 3.0-3.2 percent in 2015, with inflation remaining tame.
But the Fed also forecast that the unemployment rate would drop to 6.1-6.3 percent this year and as low as 5.6 percent in 2015.
A tabulation of Fed views on when a fed funds rate rise would take place, and by how much, still pinpointed mid- or late-2015, with most seeing the rate remaining at 1.0 percent or less at the end of that year.
But Yellen sent stocks sinking when, in response to a question, she said that interest rates could begin rising “something on the order of around six months” after the stimulus was fully wound up. But she also took a crucial step to reshape how the Fed has signaled its interest rate plans, removing what has been a source of confusion that has riled markets for months.
After her first monetary policy meeting as Fed chair, the Federal Open Market Committee