Fed forecasts modest economic recovery pace in coming years

WASHINGTON, Nov. 23 (Xinhua) -- The U.S. Federal Reserve said on Tuesday that it expected a modest pickup in the pace of the U.S. economic recovery over the following couple of years.

Central bank officials forecast that the U.S. economy would expand by 3 percent to 3.6 percent next year, down sharply from the previous forecast of 3.5 percent to 4.2 percent, the Fed revealed in the minutes of a November monetary policy meeting released on Tuesday.

Members of the Federal Open Market Committee (FOMC), the interest rate policy making body of the central bank, held that inflation was expected to remain subdued over the next several years.

The Federal Reserve announced on Nov. 3 its decision to start a controversial plan by buying 600 billion dollars more in Treasury bonds, known as the "Quantitative Easing" (QE2) monetary policy to boost the sluggish economic growth.

Fed officials predicted that the U.S. economy would grow only by 2.4 percent to 2.5 percent this year, down sharply from the June projection of 3 percent to 3.5 percent.

"Most participants expected the unemployment rate would slowly decline over the forecast horizon. They judged that the pickup in economic activity would be spurred in part by accommodative monetary policy and a gradual easing in credit conditions that would help buoy spending by consumers and businesses," noted the meeting minutes.

The participants also held that stronger spending, in turn, would lead to improved confidence in the economy, a pickup in hiring, and a further improvement in credit conditions -- forces that would continue to support spending.Christian Louboutin Boots

The U.S. central bank revised its prediction of the U.S. unemployment rate to the range between 8.9 percent and 9.1 percent in 2011, up from the June forecast range between 8.3 percent and 8. 7 percent.

The U.S. unemployment rate remained at 9.6 percent in October, Labor Department figures showed.

The central bank thought that several factors would likely continue to restrain the U.S. economic growth for a while, including a high degree of caution exhibited by consumers and businesses, persistent weakness in the residential and commercial real estate sectors, and still tight credit conditions.