Fed Trims Economic Forecast; Holds Key Interest Rate at Record Low

Federal Reserve officials lowered their forecasts for growth and employment this year and into 2012, saying the U.S. economy “is continuing at a moderate pace, though somewhat more slowly” than previously projected.

The U.S. economy will expand 2.7% to 2.9% this year, down from a previous 3.1% to 3.3% forecast, the Fed said Wednesday following a two-day meeting in Washington.

The economy will grow 3.3% to 3.7% in 2012, down from a previously projected 3.5% to 4.2%, the Fed said, while also boosting its projected range of inflation and unemployment rates for both years.

Fed governors also held the federal funds interest rate — the rate that banks charge each other — at a record low zero to 0.25%, the 20th straight time it has kept it at that level since December 2008.

Growth will pick up going into 2012, but at a somewhat slower pace, Fed Chairman Ben Bernanke said at a news conference following the statement.

The Fed also said it would complete $600 billion of bond purchases on schedule this month.

Click here for the Fed’s full statement. (Federal Reserve website.)