MercoPress. South Atlantic News Agency

The Fed confident about economic recovery but depressed with job market

The US central bank increased growth forecast for 2011 to 3%/3.9%

US Federal Reserve officials are increasingly confident of the economic recovery but remain unsatisfied with the healing of the job market, minutes of their January meeting released showed.

“Participants generally expressed greater confidence that the economic recovery would be sustained,” the Fed said.

While officials believed downside risks to the recovery were dissipating, the minutes characterized the forecasts policymakers presented at the Jan. 25-26 policy meeting as “not greatly changed.”

Officials raised their 2011 growth forecast to a range of 3.4% to 3.9% from their November projection of 3% to 3.6%.

The US jobless rate was forecast to be in a range of 8.8% to 9% in the fourth quarter of this year, little changed from the Fed's earlier projection of 8.9% to 9.1%. Unemployment was seen declining only gradually over the Fed's three-year forecast horizon.

“Overall, meeting participants continued to express disappointment in both the pace of and the unevenness of the improvements in labour markets,” the minutes said.

However markets have been reacting strongly with the S&P 500 reaching on Wednesday twice its value from just two years ago, a bounce whose vigour has not been seen since the Great Depression.

The Dow Jones industrial average gained 61.53 points, or 0.50%, to 12,288.17. The Standard & Poor's 500 Index rose 8.31 points, or 0.63%, to 1,336.32. The Nasdaq Composite Index added 21.21 points, or 0.76%, to 2,825.56.