WASHINGTON - The Federal Reserve yesterday sharply lowered its projection for economic growth this year, citing blows from the housing and credit crises along with zooming energy prices. It also expects higher unemployment and inflation.

Stocks tumbled in response. But Fed officials left the impression they would not be inclined to cut interest rates further. The decision at the Fed's last meeting on April 29 and 30 to reduce rates was a "close call," according to minutes of the private deliberations released yesterday.

The Fed hopes that its rate cuts ordered since last September, and the government's $168 billion stimulus package of tax rebates for people and tax breaks for businesses, will help energize growth somewhat in the second half of this year.

Fed officials viewed economic activity "as likely to be particularly weak in the first half of 2008; some rebound was anticipated in the second half of this year," the documents stated.

Given their hope of a second-half economic pickup, but their worries about inflation, Fed officials signaled last month that their one-quarter-point rate reduction, which dropped their key rate to 2 percent, might be their last rate cut for some time.

Under its new economic forecast, the Fed said it now believed gross domestic product would grow between just 0.3 percent and 1.2 percent this year. That is lower than a previous Fed forecast, released in late February, that estimated growth to be between 1.3 percent and 2 percent.

With economic growth slowing, the Fed projected that the national unemployment rate will rise to between 5.5 percent and 5.7 percent this year. That is higher than the central bank's old forecast for the rate to climb as high as 5.3 percent. Last year, the unemployment rate averaged 4.6 percent.