Fed lowers U.S. economic growth forecast

Fed lowers U.S. economic growth forecast

The U.S. economy is expected to grow by 1.6 to 1.7 percent in 2011, a downward revision of the previous projection, said the Federal Reserve on Wednesday.

The economy is expected to grow by 2.5 percent to 2.9 percent next year, said the U.S. central bank in an update projection released at a press conference after the meeting of its interest rate policymaking body, the Federal Open Market Committee (FOMC).

The U.S. economic growth remains "frustratingly slow" although it strengthened in the third quarter, said Fed Chairman Ben Bernanke.

He said the central bank is looking for growth and the job market to improve gradually over the next two years, but at a sluggish pace.

In its June projection, the Fed said that the economy would increase by 2.7 percent to 2.9 percent in 2011, and 3.3 percent to 3.7 percent in 2012.

In Wednesday's forecast, the central bank expects the unemployment rate to keep at 9.0 percent to 9.1 percent in 2011, and 8.5 percent to 8.7 percent in 2012. These numbers are also higher than the June projection, which expected the widely-watched jobless rate to fall to 8.6 percent to 8.9 percent in 2011, and 7. 8 percent to 8.2 percent in 2012.

In a statement released before the press conference, the Fed said that "economic growth strengthened somewhat in the third quarter, reflecting in part a reversal of the temporary factors that had weighed on growth earlier in the year."

However, "recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated," said the Fed.

The Fed continues to see "a moderate pace of economic growth over coming quarters," and "consequently anticipates that the unemployment rate will decline only gradually."

Based on information received since the FOMC met in September, the Fed saw "household spending has increased at a somewhat faster pace in recent month." Business investment in equipment and software has continued to expand, but investment in nonresidential structures is still weak, and the housing sector remains depressed.

The central bank also noted that longer-term inflation expectations have remained stable.

Given the current economic performance, the Fed decided to keep its current programs to help the economy grow.

At its previous meetings, the FOMC decided to keep the interest rate at a historically low level and to extend the average maturity of its holdings of government securities, a policy seen as a stimulus measure to boost the economy.

Editor: yan

English.news.cn   2011-11-03 02:13:49