Federal Reserve lowers US economic forecasts
The US Federal Reserve on Wednesday lowered slightly its forecasts for economic growth in the coming year, reflecting the United States' sluggish recovery from recession and the ill-effects of Europe's debt crisis, dpa reported.
The US central bank dropped its 2010 growth prediction to 3-3.5 per cent, down from a 3.2-3.7-per-cent forecast made in April. The unemployment rate, now at 9.5 per cent, will remain at 9.2-9.5 per cent through this year.
The International Monetary Fund, by contrast, last week raised its economic projections for the United States to 3.3 per cent for 2010, up from an April prediction of 3.1 per cent.
The Fed said its downward revision was based on more recent US economic figures and outside developments weighing on the United States - most notably the eurozone's debt woes. Uneasy US consumers and businesses were also stalling a revival in domestic spending.
The US recovery was expected to be "gradual" in the coming months, the Fed said, with inflation remaining at a low of near 1 per cent.
In 2011, the world's largest economy is now expected to grow 3.5- 4.2 per cent, compared to April's prediction of 3.4-4.5 per cent. Growth in 2012 is likely to come in at 3.5-4.5 per cent.
US President Barack Obama has been under pressure to show clearer signs of an economic recovery. But the Fed warned that unemployment, too, would fall slower than expected in coming years, dropping to 8.3-8.7 per cent in 2011 and 7.1-7.5 per cent in 2012.