WASHINGTON — The Federal Reserve yesterday sharply lowered its projection of economic growth this year, citing the housing and credit debacles along with energy prices. It also expects higher unemployment and inflation.

Wall Street tumbled in response. But Fed officials left the impression they are not inclined to cut interest rates further. The decision at the Fed's April 29-30 meeting to reduce rates was a "close call," according to minutes of those deliberations released yesterday. "Although downside risks to growth remained, members were also concerned about the upside risks to the inflation outlook, given the continued increases in oil and commodity prices," it added.

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

Given the hope of a second-half economic pickup but worried about inflation, the Fed signaled that its quarter-point cut, which dropped the key rate to 2 percent, might be its last for now.

In its new economic forecast, the Fed said gross domestic product will likely grow between 0.3 percent and 1.2 percent this year. Its previous forecast, in late February, estimated growth of 1.3 percent to 2 percent.

GDP is the value of all goods and services produced within the United States and is the best barometer of the economy.

The Fed projected that the national unemployment rate will rise to between 5.5 percent and 5.7 percent this year — up from its earlier forecast of 5.3 percent.

With energy prices rising, the Fed raised its inflation projection to between 3.1 percent and 3.4 percent this year — up from its previous forecast of 2.1 percent to 2.4 percent.