WASHINGTON (AP) — The Federal Reserve on Wednesday downgraded its outlook for the U.S. economy for 2013 and 2014. In doing so, it underscored concerns that led it to maintain the pace of its stimulus.
The Fed predicted Wednesday that the economy will grow just 2 percent to 2.3 percent this year, down from its previous forecast in June of 2.3 percent to 2.6 percent growth.
Next year's economic growth will be a barely healthy 3 percent, the Fed predicts.
Fed officials decided to continue their $85-billion-a-month bond purchase program, surprising most economists, who had expected a slight reduction. The bond purchases have been designed to keep long-term loan rates low to encourage spending.
The Fed's policymakers expect the unemployment rate to fall to 7.1 percent to 7.3 percent by the end of 2013, slightly below its June forecast of 7.2 percent to 7.3 percent. It predicts that unemployment will fall as low as 6.4 percent next year, down from 6.5 percent in its June forecast.
The unemployment rate is now 7.3 percent.
The projections showed that 12 of the 17 officials on the Fed's policymaking committee think the Fed shouldn't begin raising rates until 2015. And two think the Fed shouldn't do so until 2016, one more than in June. Three chose 2014, the same as in June.
The Fed doesn't say which policymakers made which forecast.