The US Federal Reserve has lowered its projections for economic growth in the United States while raising its estimates for inflation.

The central bank now anticipates a 1.7% increase in US gross domestic product (GDP) for this year, down from the earlier forecast of 2.1% made in December.

Furthermore, policymakers foresee an average inflation rate of 2.7% this year, an increase from the previous estimate of 2.5%.

Following its latest policy meeting, the Fed has kept the benchmark interest rate steady at between 4.25% and 4.5%.

A closely monitored 'dot plot' suggests that there may be two interest rate cuts later this year.

The heightened uncertainty regarding the economic outlook is linked to trade policies, particularly tariffs enacted by the US administration.

The Fed chair remarked that the rise in inflation expectations is partly attributable to tariffs.

The central bank aims for a 2% inflation rate, and although price growth has decreased from its peak, it still exceeds the target.

The Federal Reserve's decision aligns with the expectations that the Bank of England will maintain UK interest rates at 4.5%.

The announcement has resulted in a moderate impact on financial markets, with Wall Street experiencing a slight uptick following the news.