Oshiro Associates: The US Federal Reserve has reduced its estimate for the number of times it expects to raise interest rates this year.

The news came after a two-day meeting of the Federal Open Markets Committee (FOMC) which sets US monetary policy. The Fed left the target range for the Fed Funds rate unchanged at 0.25% - 0.5% as expected but the projection for four interest rate hikes in 2016 was quietly scaled back to just two.

Citing concerns about the effect of the global economic slowdown on the domestic US economy, Fed Chair Janet Yellen said that proceeding cautiously would allow the FOMC to verify that the labor market will continue to strengthen.

“This looks like a backpedal, it sounds like a backpedal so that makes it a backpedal,” said an Oshiro Associates analyst. “This is the equivalent of monetary policy easing and suggests that our predictions for no more rate rises in 2016 will be proven entirely correct,” he continued.

The US economy has been sending mixed signals about its health. Though the economy is creating jobs, most are part-time and most are in low-paying service sectors like restaurants and health care. Consumer spending/retail sales are swinging between stagnating and falling while industrial production has resumed its decline.

Oshiro Associates says it sees the Fed being forced to cut rates back to zero before the end of 2016 and says there is a very real possibility of the central bank introducing another round of quantitative easing.

“This recovery in nearly 7 years old and we’re back staring recession in the face without actually having really reached escape velocity,” said the Oshiro Associates analyst.