Fed Forecasts Jobless Rates Near Ten Percent

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On Wednesday, the Federal Reserve said unemployment will continue to rise in the fourth quarter of this year.

In the Federal Open Market Committee's June meeting report, the Fed said Central bankers expect a contraction of 1 percent to 1.5 percent this year, before growth resumes in 2010 and 2011.

They are are anticipating a jobless rate of 9.8 percent to 10.1 percent this year.

Wednesday's figures reflected the so-called central tendency of projections, which exclude the three highest and three lowest forecasts.

Before Wednesday's announcement, officials had lowered their 2009 projections for the economy three straight times, with the most recent forecast in April calling for a contraction in gross domestic product of 1.3 percent to 2 percent. They had also expected the jobless rate to rise to between 9.2 percent and 9.6 percent this year.

Unemployment reached 9.5 percent in June.

Consumer prices are now forecast to rise by 1 percent to 1.4 percent this year, compared with April projections of 0.6 percent to 0.9 percent. Excluding food and energy, prices are expected to increase 1.3 percent to 1.6 percent, up from a range of 1 percent to 1.5 percent three months earlier.

Source:  Bloomberg

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