U.S. Federal Reserve officials have modified their unemployment rate predictions as they expect the rate to top 10 percent above the previously forecast value of 9.6 percent.

According to a report released Wednesday, federal policymakers now believe that the unemployment rate will rise to between 9.8 and 10.1 percent in 2009 before declining slightly next year.

In June the nation's unemployment rate climbed to 9.5 percent, a 26-year high. The latest projections have cast a new shadow of doubt on the timing the economy will take to recover.

Data between the Fed's April and June meetings indicated that the economic contraction was slowing and that the decline in activity could cease before long, officials said in the minutes of their June 23-24 meeting, released Wednesday, the Wall Street Journal reported.

Unemployment