Fed cuts US 2008 growth forecast

The US Federal Reserve has cut its forecast for 2008 economic growth to a range of 1.8% to 2.5% - due to tight credit markets and weakness in housing.
In July it had predicted annual growth of between 2.5% and 2.75%.

The forecast was the first quarterly update delivered under a new policy implement by Fed boss Ben Bernanke.

The Fed's comments came as it also revealed that a decision to cut interest rates at its last meeting had been "a close call".

In recent weeks a number of big banks have reported heavy losses on the back of exposure to sub-prime mortgage loans while government data has shown that demand for hosing continued to be weak.

Analysts had been widely expecting the growth forecast to be trimmed, though some thought the prediction may have been less optimistic.

"A growth of 1.8% or even 2.5% at the high side, I thought was still really pretty high," said Mary Ann Hurley of D A Davidson & Co.
Source. Bbc.