Federal Reserve Chairman Ben Bernanke says Fed officials expect a moderate economic recovery to continue through 2011 after weak growth in the first three months of the year. Bernanke spoke at a historic news conference, the first time in the Fed’s 98-year history that a chairman has begun holding regular sessions with reporters. The news conference gave Bernanke a chance to drive a debate about Fed policy. Critics have said the Fed’s efforts to boost growth raise the risk of high inflation. Investors are seeking clues about when the Fed will start raising interest rates to help slow price increases.
Fed officials are more upbeat about the prospects for employment for the rest of this year but foresee higher inflation than they did at the start of the year. In an updated forecast, the Fed projects the economy will grow between 3.1% and 3.3% this year. That’s a downward revision from their last forecast, which saw growth possibly as high as 3.9% this year. The new forecast reflects slower growth in the first three months of this year, due to higher energy costs. The Fed’s latest outlook foresees lower unemployment than was expected in January. The unemployment rate, which stood at 9.8% in November, has fallen to 8.8%. The Fed’s new forecast projects the unemployment rate will fall to between 8.4% and 8.7% by the end of the year.
