Fed lowers forecasts for US unemployment rate, reflecting faster-than-expected decline

WASHINGTON – The Federal Reserve expects unemployment to fall a bit further over the next two years than it thought in September and expects inflation to remain below the Fed’s target level.

The Fed predicts the unemployment rate will dip as low as 6.3 per cent next year and 5.8 per cent in 2015. Both are one-tenth of a percentage point lower than it forecast in September. Unemployment has fallen faster this year than policymakers had predicted. It’s now 7 per cent.

The Fed estimates that economic growth will be between 2.8 per cent and 3.2 per cent next year, roughly what it predicted in September. Growth for 2013 will likely be about 2 per cent.

Fed policymakers have said they’ll keep the short-term rate they control near zero at least until unemployment falls below 6.5 per cent.