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Fed lowers growth outlook, boosts jobless rate estimate

Fed Chairman Ben Bernanke says growth in US economy to be "frustratingly slow."

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Wall Street traders gather near a TV playing Fed Chairman Ben Bernanke's news conference on November 2, 2011 in New York City. (Mario Tama/AFP/Getty Images)

The Federal Reserve has boosted its estimates of unemployment and lowered its outlook for economic growth for the next two years, according to U.S. news reports.

The unemployment rate, now 9.1 percent, won’t come down significantly next year, according to the Fed’s new estimates, the LA Times reports.

The Feb expects the jobless rate to be in a range of 8.5 percent to 8.7 percent in 2012, up from the previous forecast of 7.8 percent to 8.2 percent.

Meanwhile, economic growth is likely to be "frustratingly slow," Fed Chairman Ben S. Bernanke said, with concerns about Europe contributing to "strains" in financial markets, Bloomberg reports.

According to The Associated Press, the central bank's latest forecast predicts that the U.S. economy "will grow no more than 1.7 percent for all of 2011" and between 2.5 percent and 2.9 percent for 2012.

Both forecasts are roughly a full percentage point lower than the Fed's projections from June.

“We did overestimate the pace of recovery,” Bernanke said at a news conference following the Fed’s two-day meeting.

(GlobalPost's Macro blog takes a broader view: The world according to America, Inc.)

The Fed didn't announce any new initiatives to help the economy, although Bernanke reportedly said: "We remain prepared to take action as appropriate to make sure the recovery continues." 

Asked if the Fed would purchase more mortgage-backed securities to help the depressed housing market, Bernanke said that was a "viable option," the AP reports. 

Reuters is reporting the "highlights" of Bernanke's press conference following the Fed's policy meeting on Wednesday. 

http://www.globalpost.com/dispatch/news/regions/americas/united-states/111102/us-economy-ben-bernanke-federal-reserve-unemployment