MercoPress. South Atlantic News Agency

The Fed cuts US economy growth estimate for 2011 and ups unemployment

Thomas Hoenig of the Kansas City Federal Reserve Bank voted against pumping more money into the economy

The Federal Reserve has cut its 2011 growth forecast for the US economy, newly released minutes of its last policy committee meeting reveal. The Fed expects growth of 3-3.6% next year, down from its previous 3.5-4.2% estimate. It also forecasts higher unemployment and lower inflation than before.

Meanwhile, it has emerged that the US economy grew faster than first thought in the third quarter of this year, at an annualised rate of 2.5%.

This was revised up from an initial estimate of just 2%, the Commerce Department said.

Earlier this month, the US Federal Reserve said it would buy 600 billion USD of US government debts in order to try to lower long-term interest rates and thereby boost the economic recovery.

The minutes of the Fed’s 2-3 November meeting show that support for the move on the policy committee was almost unanimous, with only one member voting against.

Thomas Hoenig of the Kansas City Federal Reserve Bank voted against, as expected by markets following several public statements over his concern at the risk that the Fed's actions may lead to rising inflation and speculative bubbles.

The minutes also revealed that the central bank committee discussed a number of other policy options, including targeting specific long-term interest rates at which it would be willing to buy government debts.