Fed cuts US growth forecast to 2.4%

21 June 2012

The US is set to experience slower economic growth throughout the remainder of 2012 due to a combination of factors, the Federal Reserve (Fed) has announced.

Ben Bernanke, chairman of the body, revealed yesterday (20 June) policymakers had decided to cut their forecast for expansion for this year to 2.4 per cent from 2.9 per cent as the country's financial system remains weak.

Mr Bernanke explained that unemployment remains too high and is showing no signs of dropping in the near future, leading the Fed to heighten its prediction for joblessness in 2012 to 8.2 per cent from eight per cent.

In an attempt to stimulate the economy, the Fed has announced the extension of Operation Twist - its $267 billion programme where short-term bonds can be replaced by long-term alternatives - until the end of the year.

And Mr Bernanke commented: "We are prepared to take further steps if necessary to promote sustainable growth and recovery in the labour market."

By Gary Cooper

Become a bobsguide member to access the following

1. Unrestricted access to bobsguide
2. Send a proposal request
3. Insights delivered daily to your inbox
4. Career development