Moody’s Cuts 2016 U.S. Growth Forecast, Cites Weak Global Demand

  • Says Fed seen raising rates ‘at most’ twice this year
  • China poses greatest risk, with potential to roil markets

Moody's Cuts 2016 U.S. Growth Forecast

Moody’s Investors Service lowered its growth forecast for the U.S. economy this year to 2 percent from 2.3 percent to account for a weak first quarter, while anticipating underlying resilience through 2017.

Moody’s said it expects the Federal Reserve to raise its benchmark interest rate “at most” twice this year, according to a statement it e-mailed. The ratings company also sees the country’s gross domestic product rising 2.3 percent in 2017.

One of the biggest risks facing the global economy is a more pronounced slowdown in China than currently anticipated, given that it could have a "significant" impact through roiling financial markets and spurring investors to cut back on riskier assets. Elena Duggar, an associate managing director at Moody’s, said in the statement that "the global recovery has weakened further and the outlook across countries remains uneven and largely weaker than over the past two decades."

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