U.S. economy to pick up momentum this year and next: Fed

WASHINGTON, Jan. 3 (Xinhua) -- The pace of U.S. economic activity would pick up gradually in 2012 and 2013, while the unemployment rate would continue to hover at a stubbornly high level, the U.S. Federal Reserve projected on Tuesday.

The U.S. economy would gain momentum this year and next, boosted by the "accommodative monetary policy, further increases in credit availability, and improvements in consumer and business sentiment," the central bank said in the minutes of a December 2011 Federal Open Market Committee (FOMC) meeting released on Tuesday.

"Over the forecast period, the gains in real gross domestic product (GDP) were anticipated to be sufficient to reduce the slack in product and labor markets only slowly, and the unemployment rate was expected to remain elevated at the end of 2013," said the Fed.

With long-run inflation expectations stable and the substantial slack in labor and product markets anticipated to persist over the forecast period, top officials of the U.S. central bank predicted that the inflation would be subdued in 2012 and 2013.

"The information reviewed at the Dec. 13 meeting indicated that U.S. economic activity expanded moderately despite some apparent slowing in the growth of foreign economies and strains in global financial markets," noted the minutes, usually released three weeks after the meeting of the FOMC, the Fed's powerful interest- rate setting panel.

Employment opportunities at state and local governments declined further, and both long-duration unemployment and the share of workers employed part time for economic reasons remained high, said the Fed.

Initial claims for unemployment insurance edged down since early November, but were still at a level consistent with only modest employment gains, while indicators of job openings and businesses' hiring plans were little changed, added the Fed.

Activity in the housing market continued to be depressed by the substantial inventory of foreclosed and distressed properties, and by weak demand that reflected tight credit conditions for mortgage loans and uncertainty about future home prices, noted the minutes.

In an effort to improve the transparency of public communication, the Fed announced it would start updating the public four times a year on FOMC participants' projections of appropriate future monetary policy, in line with the release of the Summary of Economic Projections (SEP), which also occurs four times each year.

In the SEP, FOMC participants' projections for economic growth, unemployment and inflation were conditioned on their individual assessments of the path of monetary policy that was most likely to be consistent with the Fed's statutory mandate to promote maximum employment and price stability.

The next FOMC meeting is scheduled to take place on Jan. 24 and 25.