Fed Minutes Confirm Gloomy Outlook

Policymakers at the Federal Reserve acknowledged the potential for a deep downturn amid mounting inflation as central bankers discussed the bleak economic conditions in the U.S. in March, according to minutes from the central bank's latest meeting released Tuesday.

Fed officials stuck to their forecast that while some contraction in the U.S. "now appeared likely" in the first half of 2008, they expected the economy to begin to improve in the second half of the year, according to the minutes of the March 18 meeting. Officials expect the recovery to be followed by a stabilization in the national housing market that will "foster a further pickup" in the economy in 2009.

That said, central bankers also noted that "considerable uncertainty" surrounded the forecast. ...