Fed Cuts Growth Estimate Again

Fed Cuts Growth Estimate Again

Washington, June 21 (QNA) – The Federal Reserve, America’s central banking system, has reduced its estimates for U.S. economic growth this year to a range of 1.9% to 2.4%, down from an April projection of 2.4% to 2.9%.

Federal Reserve Chairman Ben Bernanke said at a press conference that the Fed was optimistic about the recovery of the economy that has been through its worst levels since 2008.

The unemployment rate is still uncomfortably high at 8.2%, and the government’s latest jobs report showed employers added only 69,000 jobs in May, the weakest hiring in a year, he said.

Accordingly, the Fed extended its existing policy known as (Operation Twist), and lowered its expectations for the job market and the broader U.S. economy this year.

Under the Twist program, set to be ready within two weeks, the Fed swaps short-term bonds for ones with longer durations, thereby pushing interest rates lower on mortgages and business loans.

The central bank said it will sell $267 billion of shorter-term securities and buying the same amount of longer-term debt in a bid to reduce borrowing costs and spur the economy.

According to Fed the high unemployment rates are posing threats on Current US president, Barack Obama’s chances to a second term as a president during the upcoming presidential elections set for November.

It also added that the persistent turbulence of the financial market due to the Euro zone debt crisis puts US economy at risk. (QNA)