Page last updated at 20:41 GMT, Wednesday, 18 February 2009

Fed cuts 2009 economic forecast

US Federal Reserve chairman Ben Bernanke
Mr Bernanke says the Fed will publish longer-term economic forecasts

The US Federal Reserve has cut its economic forecasts for 2009 and considered setting an inflation target, minutes from its meeting have shown.

The central bank now expects a fall in output of between 0.5% and 1.5%.

In October it had anticipated output of between a shrinkage of 0.2% and growth of 1.1%.

Separately, Fed Chairman Ben Bernanke told the National Press Club in Washington that the bank sees "little risk" of high inflation.

He said he expects inflation to stay low because of weak global economic activity and low commodity prices.

Mr Bernanke also hinted that the central bank was moving towards setting a specific target for inflation.

From now on the Fed will publish projections for the next five to six years on inflation, growth and unemployment, going beyond its normal three-year forecast horizon.

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