AlHijjah 6, 1432, Nov 2, 2011, SPA -- The Federal Reserve on Wednesday slashed its forecast for economic growth, raised projections for unemployment, and suggested Europe's debt crisis posed big downside risks to the U.S. economy, Reuters reported. However, it took note of a strengthening of the U.S. economy in the third quarter and held monetary policy steady. While the U.S. central bank offered no direct hints it was considering fresh steps to help the economy in a post-meeting statement, one official pushed for action. In the end, the Fed mustered a 9-1 vote for a steady course. "Economic growth strengthened somewhat in the third quarter," the central bank said in a post-meeting statement. "Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated." "There are significant downside risks to the economic outlook, including strains in global financial markets," it warned. In fresh quarterly projections, the Fed lowered forecasts for growth and raised forecasts for unemployment for this year, 2012 and 2013. Policymakers did not see the jobless rate falling to a level they consider consistent with full employment even at the outer edge of their forecasting horizon, the final quarter of 2014. Officials now expect the world's largest economy to expand by a tepid 2.5 percent to 2.9 percent next year, down from the rosier 3.3 percent to 3.7 percent they were expecting in June. They saw the unemployment rate going no lower than 8.5 percent to 8.7 percent by the end of 2012, up from the more sanguine 7.8 percent to 8.2 percent range envisioned in June. Fed officials believe the economy will have reached full employment when the jobless rate drops to between 5.2 percent and 6 percent. In their forecast, the unemployment rate would still be at 6.8 percent to 7.7 percent at the end of 2014. -- SPA
