INSTANT VIEW: Federal Reserve cuts growth forecast

NEW YORK (Reuters) - The Federal Reserve on Wednesday cut its forecast for economic growth in 2008 and warned of higher inflation and unemployment but also signaled it was unlikely to cut interest rates again soon.

Federal Reserve economic forecasts

KEY POINTS: * "Several members noted that it was unlikely to be appropriate to ease policy in response to information suggesting that the economy was slowing further or even contracting slightly in the near term," the Fed said in minutes of its April 29-30 meeting. * In an accompanying forecast, the Fed cut its projection for economic growth to scant 0.3 percent to 1.2 percent in 2008, down from 1.3 percent to 2 percent it estimated three months ago. * The central bank said it expects inflation to remain "elevated" and unemployment to increase "significantly."

COMMENTS:

JOHN CANAVAN, ANALYST, STONE AND MCCARTHY RESEARCH ASSOCIATES,

PRINCETON, NEW JERSEY:

"The Treasury market didn't react directly to the Fed minutes. The minutes were rather hawkish. The idea that the April rate cut, itself, was a close call got a lot of attention and that sent equities tumbling lower and the ensuing risk aversion bid due to the equity sell-off lifted Treasuries off of the lows."

CARL LANTZ, U.S. INTEREST RATE STRATEGIST, CREDIT SUISSE, NEW

YORK: