The Federal Reserve projects the unemployment rate will stay elevated until late 2015, suggesting it will keep short-term interest rates low for the next three years.
The latest economic forecasts released Wednesday after the Fed’s final meeting of the year coincided with a new communication strategy announced by the Fed that links future interest rate hikes with unemployment below 6.5 percent.
The central bank said it expects economic growth to improve next year but be no stronger than 3 percent. Growth could increase to 3.5 percent in 2014 and 3.7 percent in 2015.
Unemployment will fall no lower than 7.4 percent next year and 6.8 percent by the end of 2014, the Fed projects. The earliest the Fed sees unemployment dropping below 6.5 percent is the end of 2015.