Wall Street Just Got More Pessimistic About the U.S. Economy. Will the Fed Follow Suit? – Matthew Boesler Catarina Saraiva

Federal Reserve officials will probably cut their forecasts for economic growth when they gather again next month, though not enough to deter their intent to raise interest rates later this year.

The median respondent to a survey of 79 economists conducted by Bloomberg from May 8 to May 13 said U.S. gross domestic product would grow 2.3 percent in the final quarter of 2015 from a year earlier, down from the 2.7 percent median estimate in April.

That compares with a 2.5 percent midpoint of the central tendency of estimates submitted by Fed officials at their March meeting, the last time they issued updated forecasts. The central tendency denotes the range of estimates excluding the three highest and three lowest of the 17 policy makers’ projections.

Economic data released since the Federal Open Market Committee’s March forecasts have revealed unexpected weakness in the first quarter. Economists have attributed this to mostly transitory factors such as the rise of the dollar, a drop in oil prices, harsh winter weather and a slowdown at West Coast ports due to labor disputes.