Fed boost for US recovery

Julian Harris
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POSITIVE data from the US has caused the Federal Reserve to raise its forecasts for economic growth, it was revealed last night.

“Participants generally expressed greater confidence that the economic recovery would be sustained,” the Fed revealed in minutes of its last rate setting meeting in January.

The GDP growth forecast was increased to a range of 3.4 per cent to 3.9 per cent, up from the November projection of three per cent to 3.6 per cent.

However, America’s exceptionally high level of unemployment remains a concern for the Fed, with officials forecasting only modest decline over the coming two years.

Meanwhile, the forecast for inflation moved only at the bottom end, edging from a range of 1.1 to 1.7 per cent to 1.3 to 1.7 per cent.

“Under those circumstances, we don’t anticipate that the Fed will call an early halt to its plan to buy a total of $600bn (£373.5bn) of Treasury securities by mid-year,” said Paul Ashworth of Capital Economics.

However, the downside risks to growth and dangers of deflation had “diminished,” the Fed announced, declaring faith in a sustainable recovery, with the economy “on a firmer footing” than previously thought.