Fed Lowers 2012 Growth Outlook, Sees 8.6% Unemployment

Federal Reserve officials lowered their outlook for U.S. economic growth in 2012 and forecast that unemployment will average from 8.5 percent to 8.7 percent in the final three months of next year.

The forecasts were released after the Federal Open Market Committee today acknowledged economic growth “strengthened somewhat” in the third quarter while also citing “continuing weakness” in labor markets and “significant downside risks” to the economic outlook. The committee left unchanged its plans to lengthen the maturity of its bond portfolio and maintain its mortgage-backed securities investments, and keep the federal funds rate in a range of zero to 0.25 percent until mid-2013.