At a time when the People's Bank of China is revising their forecasts for China upward and trying to reign in growth, the Federal Reserve Bank in the U.S. is lowering their forecasts for the U.S.  The central banks of each country are trying to deal with interesting issues which are particular to that country: snow storms, rapidly increasing income and demand for goods and services in China; credit derivative debacles in the U.S. along with accumulated consumer debt issues in the U.S.

One thing we can say for certain, these indicators all point to a continuing depreciation in the U.S. dollar (and the need for the People's Bank of China to appreciate the renminbi)!

Specifics:

The Fed's new growth forecast of 1.3 percent to 2.0 percent is down from an October prediction of 1.8 percent to 2.2 percent. Unemployment would reach 5.2 percent or 5.3 percent this year, compared to the earlier forecast of 4.8 percent or 4.9 percent.  On inflation, Fed officials expect consumer prices to rise 2.1 percent to 2.4 percent this year, which is slightly higher than the forecasted October numbers.  HOWEVER, many private analysts predict higher inflation and a recession currently.  NY Times article  The CPI report today states a 4.3% past 12 month inflation rate!  The core CPI (excluding food and energy) is up .3% in January - above the Fed's target of 2% annually! 

"With no signs of stabilization in the housing sector and with financial conditions not yet stabilized, the [Federal Open Market Committee] agreed that downside risks to growth would remain even after this action," the Fed said in the minutes of its Jan. 29-30 meeting, released Wednesday with the usual three-week lag. The central bank lowered the federal-funds rate by a half percentage point at that meeting to 3%.  Wall Street Journal (Subscription Required)

We shall see, eh?!