Federal Reserve sees slow recovery for years to come
POSTED: Thursday, March 21, 2013 - 12:00am
UPDATED: Thursday, March 21, 2013 - 12:04am
NEW YORK (CNNMoney) — The Federal Reserve trimmed its forecast for economic growth in 2013, but said Wednesday that it's a bit more optimistic that the unemployment rate will decline.
The Fed expects the U.S. economy to grow between 2.3 percent and 2.8 percent this year, slightly weaker than its prior estimate.
Meanwhile, the central bank expects the unemployment rate to fall to between 7.3 percent to 7.5 percent by the end of the year. The unemployment rate was 7.7 percent as of February.
Overall, these minor tweaks to the forecasts don't signal any major changes for monetary policy. The central bank still plans to keep its stimulative policies in place, probably until 2015.
Federal Reserve policymakers voted 11-to-1 to keep short-term interest rates near zero, as the Fed has done since December 2008 in an effort to stimulate the economy.
The Fed reiterated that it intends to keep rates low until the unemployment rate falls to 6.5 percent or inflation exceeds 2.5 percent a year. Those are rough guidelines, not strict targets. Most Fed officials don't expect those levels to be met until 2015.
The central bank also said it will continue to buy $40 billion in mortgage-backed securities and $45 billion in Treasuries each month for the foreseeable future. The hope is that those purchases will continue to push long-term interest rates even lower.
Esther George, president of the Kansas City Fed, was the only voting member to oppose the decision, citing concerns that the Fed's policies would increase "the risks of future economic and financial imbalances."