U.S. still seen growing above potential in 2016: N.Y. Fed

The forecast growth for U.S. gross domestic product, while above its potential rate of about 1.75 percent, was lower than the staff's estimate of 2.5 percent last year.

The group saw a "sluggish" first quarter and anticipated gross domestic product to accelerate at a 2.5 percent pace during the rest of the year.

In a separate report released on Friday, the New York Fed downgraded its first-quarter GDP outlook to a 0.8 percent from 1.1 percent forecast a week ago.

Still, the domestic jobless rate should decline to 4.75 percent by year-end, N.Y. Fed economists Jonathan McCarthy, Richard Peach and Robert Rich said in a blog post on Friday.

The unemployment rate rose to 5.0 percent in March from 4.9 percent in February as more workers sought jobs in a steadily improving labor market.

(Reporting by Richard Leong; Editing by Chizu Nomiyama and Dan Grebler)