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Fed sees signs of economic slowdown

The Federal Reserve on Wednesday left its benchmark interest rate unchanged, as expected, while noting that U.S. economic growth slowed at the end of the year.

The central bank, which in December increased its rate in a range of 0.25 percent to 0.50 percent, also reiterated that it plans to raise borrowing costs only gradually.

"Any reading of this statement implies very strongly that they are at least reassessing economic conditions," Jim Russell, principal & portfolio manager at Bahl & Gaynor, told CBS MoneyWatch. This "pushes back" expectations of additional Fed rate hikes this year, with the four previously signaled by the Fed "highly unlikely to happen at this point," Russell said. "Right now the market is pricing in one."

Although the job market and housing sector continue to strengthen, other parts of the economy are cooling off, the Federal Open Market Committee said in its policy statement.

"Information received since the Federal Open Market Committee met in December suggests that labor market conditions improved further even as economic growth slowed late last year," said the panel, which sets interest rates for the Fed. "Household spending and business fixed investment have been increasing at moderate rates in recent months, and the housing sector has improved further; however, net exports have been soft and inventory investment slowed."

Ian Shepherdson, chief economist for Pantheon Macroeconomics, thinks Fed officials are likely to hike rates another 0.25 percent when they convene for their next two-day meeting March 15-16.

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