26 Apr 2012

Federal Reserve forecasts stronger growth

12:48 pm on 26 April 2012

The US Federal Reserve is forecasting slightly stronger activity growth after describing the economy as expanding moderately.

The central bank is predicting an expansion of between 2.4% and 2.9%, up from its 2.2% to 2.7% projection in January.

The banks interest policy setting panel has also lowered its forecast for the unemployment rate to between 7.8% and 8.0% from a range of 8.2% to 8.5% in January.

Howeverit left interest rates unchanged and said it did do not expect a rate rise until late 2014, the BBC reports.

Seven of the committee members expect to raise rates in 2014 - up from five in January - while none of them expects the first increase to be any later than 2015.

At a news conference, Federal Reserve chairman Ben Bernanke said most committee participants expect economic growth to remain moderate over the coming quarters and then to pick up gradually.

"Among other factors, and notwithstanding some signs of improvement, the ongoing weakness of the housing sector still represents a headwind for recovery."

Mr Bernanke said strains in global financial markets continued to pose risks.