US Fed officials slightly more optimistic on 2021-22 growth

WASHINGTON: US central bankers are slightly more optimistic about economic growth prospects over the next two years and see an improving employment picture, the Federal Reserve said Wednesday.

The rollout of vaccines against Covid-19 raise hopes that the pandemic-damaged economy can begin to return to normal, but the outlook has been complicated by a surge in infections which raise fears of another round of widespread shutdowns.

Still, members of the policy-setting Federal Open Markets Committee (FOMC) see growth of 4.2 percent in 2021 and 3.2 percent in 2021, two-tenths better than the September forecast.

Their median forecasts also show the unemployment rate falling to 5.0 percent next year and 4.2 percent the following year, a slight improvement over the last quarterly estimate.

Fed Chair Jerome Powell is due to hold a press conference to expand on the decision and likely will be asked to comment on efforts in Congress to provide another stimulus package to help families and business hit by the pandemic.

The central bank slashed the benchmark lending rate to zero in March when the coronavirus struck the US economy, and has pledged to keep it there until it achieves its policy goals of "maximum employment and inflation at the rate of two percent over the longer run."

The median forecasts reflect the rate at zero into the long run, but five FOMC members see at least a small increase by the end of 2023, according to the Summary of Economic Projections (SEP).

Some analysts had expected the Fed to boost its bond-buying program as a way to provide more stimulus through an influx of cash into financial markets, but the committee did not oblige, keeping the pace at $120 billion per-month.

However, the FOMC pledged to continue asset purchases at that rate "until substantial further progress has been made toward the Committee's maximum employment and price stability goals."