Fed Officials Target Jobs, Concerned Less with Inflation

September 13, 2012 4:17 PM EDT
Federal Reserve officials today said they expect economic growth will improve faster than they had earlier projected. Interestingly, they also announced additional plans to expand its holdings of long-term securities with open-ended purchases of $40 billion of mortgage debt a month. They plan to keep the program in place until they see signs the economy is improving and will not rush to tighten policy.

Chairman Bernanke said the new program will have a significant effect on economy and the labor market but will not be a panacea for jobs growth.

Forecast Changes:

Federal Open Market Committee participants upgraded their estimate for 2013 gross domestic product growth to 2.5 percent to 3 percent, compared with 2.2 percent to 2.8 percent in June.

Estimates for 2014 are from 3 percent to 3.8 percent, versus 3 percent to 3.5 percent in the previous forecast, according to the central tendency forecasts, which exclude the three highest and three lowest of 19 projections.

Officials forecast today that unemployment will average 7.6 percent to 7.9 percent in the final three months of next year, compared with 7.5 percent to 8 percent at their June meeting.

In 2014, the unemployment rate will be 6.7 percent to 7.3 percent in the fourth quarter, compared with an earlier estimate of 7 percent to 7.7 percent.

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