The Federal Reserve left the door open to further US interest rate cuts as it lowered its growth forecast for 2008 due to continued tightening in the housing and credit markets. Daily Telegraph

The US central bank is concerned about downside risks to the economy even after two separate rate cuts in January lowered its key base rate from 4.25% to 3%. As a result, the Fed reduced its growth forecast for the current year to 1.3%-2%, from its previous forecast made in November of 1.8%-2.5%.

The gloomy outlook – taken from the minutes of the latest Federal Open Markets Committee meetings – came despite a number of Fed members seeing the possibility of a “rapid reversal” of its recent rate-cutting policy.