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February 16, 2011

Fed Reserve forecasts US economy to grow 0.3% more for 2011 over a prediction made two month ago

Minutes of the Fed's policy-setting meeting Jan. 25-26 showed central bank officials expect U.S. gross domestic product to increase between 3.4% and 3.9% this year. That compares with a November 2010 prediction the economy would expand between 3.0% and 3.6% in 2011.

Though the economy looks a bit stronger, central bank officials expect the unemployment rate to remain at a high level between 8.8% and 9.0% at the end of 2011, even after January's decline to 9.0%. Despite the recent surge in food and energy prices, inflation is seen between 1.3% and 1.7%, in line with the November projections and where the Fed wants prices to be.



With inflation seen staying low and unemployment high, Fed officials decided to keep in place their easy-money policies, including buying government bonds, at their first Federal Open Market Committee meeting of 2011. The bond purchases -- which began after the recovery stumbled in the middle of last year and are due to end in June -- are aimed at boosting the economy by keeping interest rates low and lifting stocks.

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