Federal Reserve increases 2012 growth targets

Interest rate setters from the Federal Reserve have increased their forecasts for economic growth in the US this year, reports the BBC.

They are anticipating growth between 2.4 per cent and 2.9 per cent, a rise from January’s projection of between 2.2 per cent and 2.7 per cent. In addition, they have lowered their expectation for the rate of unemployment from between 8.2 per cent and 8.5 per cent in January to a range of 7.8 per cent to eight per cent.

However, they have kept interest rates unchanged and revealed that they do not anticipate an increase in rates until late 2014. Seven committee members expect rates to go up in 2014 – up from January’s figure of five – while none of them predict that the first rise will come later than 2015.

Ben Bernanke, the chairman of the Federal Reserve, said at a news conference that most committee participants forecast economic growth to be moderate during the quarters ahead and then gradually pick up. He explained that among other factors, the ongoing housing sector weakness continues to act as a headwind for recovery. He added that strains within global finance markets also pose considerable risks to outlook.