Federal Reserve officials Wednesday alluded to the downbeat GDP report as they wrapped up their two-day meeting to set monetary policy. The Fed said economic activity “paused” in recent months but cited weather and “other transitory factors” as the main culprits. It maintained its pledge to help stimulate the economy by purchasing $85 billion in long-term securities each month and keeping its target interest rate at a historic low.
Stock markets seemed to shrug off the news that the economy contracted but began falling after the Fed released its comments. The major U.S. indexes ended the day down more than 0.3 percent.
Economists also cautioned that Wednesday’s report was the government’s first crack at measuring economic activity in the fourth quarter and that the data are often revised. An updated report is slated for release Feb. 28, and many economists predicted it will be more upbeat.
But Steve Ricchiuto, chief economist at brokerage firm Mizuho Securities, was less optimistic.