In a new economic outlook released Tuesday, the U.S. Federal Reserve (Fed) lowered its growth target for the economy in 2008, raising hopes that the central bank will cut interest rates again when it meets in December. In an addition to the notes from its last interest-rate meeting, the Fed said it now expects the economy to grow at about a 1.8 percent to 2.5 percent rate next year, down from a forecast in June of 2.5 percent to 2.75 percent growth. In its forecast, the Fed cited “tightened terms and reduced availability of sub-prime and jumbo mortgages, weaker-than-expected housing data, and rising oil prices” as the main reasons for revising its projections downward. The central bank also issued relatively weak growth targets for the following two years. Fed policymakers indicated that they expect the economy to grow at a 2.3 percent to 2.7 percent pace in 2009 and at a 2.5 percent to 2.6 percent rate in 2010. In the notes from its last policy-setting meeting, the Fed said that the decision to cut a key interest rate last month was a “close call.” Analysts said the Fed notes indicate that it is more likely the central bank will cut interest rates by a quarter point to 4.25 percent on December 11.
