US Fed cuts growth forecasts for 2012

The Federal Reserve said it now expects US growth to be weaker and unemployment higher than it thought in its last set of forecasts, as the central bank left the door open to fresh measures to help the world's biggest economy.

Fed chairman Ben Bernanke said consumer confidence was back where it was during the depths of the recession
As expected, the Fed held interest rates at 0pc to 0.5pc, but cut its economic growth forecasts for 2012 to between 2.5pc and 2.9pc, down from 3.3pc to 3.7pc.

It also took a more gloomy view on jobs, predicting unemployment will stick at 8.5pc to 8.7pc next year against the 7.8pc to 8.2pc range it had forecast.

While acknowledging the economy had shown improvement in the third quarter, Fed chairman Ben Bernanke struck a downbeat note in his last press conference of the year.

"Right now consumer confidence is where it was during the depths of the recession. That's discouraging," he said.

Mr Bernanke refused to be drawn on whether a fresh round of stimulus is likely, but strongly suggested there is more the bank could to do tackle unemployment. "Cyclical unemployment left untreated, so to speak, can become structural unemployment," he said.

Unlike the Bank of England, the Fed is tasked with both lifting employment and controlling inflation

In a statement, the Fed left open the possibility of taking further steps later to try to boost the sluggish economy. But it gave no hint as to what those moves might be.

The vote was 9-1. Charles Evans, the president of the Chicago Federal Reserve Bank, dissented. The statement said he wanted to take stronger action.