22 Jun 2012

US central bank cuts growth forecasts

5:07 am on 22 June 2012

The United States Federal has cut its forecast for US economic growth in 2012 and extended its monetary stimulus programme.

The Fed slashed its estimates for US economic growth to a maximum of 2.4% down from a 2.9% projection in April.

Bank officials said they expected a US unemployment rate of up to 8.2% this year, having forecast up to 8% on 25 April, the BBC reports.

The bank also extended its programme of swapping short-term bonds for long-term ones, known as Operation Twist, until the end of the year.

The Fed said it would swap $US267 billion in US Treasury securities by the end of 2012. The programme had been set to end this month.

The idea of the programme is to cut the long-term cost of borrowing for businesses and households.

In a news conference, Federal Reserve chairman Ben Bernanke said unemployment was still too high and was going down too slowly.

Wall Street stock indices were down slightly at the end of a volatile day's trading on Wednesday.