Some Federal Reserve officials predicted an even deeper recession than they expected three months earlier and a more sluggish recovery over the next two years as labor markets remain under pressure.
Some members noted that a further increase in the total amount of purchases might well be warranted at some point to spur a more rapid pace of recovery, according to the minutes of the April 28-29 meeting released Wednesday.
Fed staff economists revised their projections for the economy in the second half of this year and 2010 with real GDP expected to edge higher in the second half and then increase moderately next year.
Fed officials see the economy contracting between 1.3% and 2% this year, versus forecasts for only a 0.5%-1.3% decline in January.
Gross domestic product is only expected to advance 2%-3% next year, which is below what officials though in January. They also downgraded their 2011 forecasts, though they are still centered around a solid 3.5% to 4.8% rate of growth.
The unemployment rate is expected to end in 2009 between 9.2%-9.6%, significantly higher than what officials expected in January. One official expects to reach 10% this year.
“All members agreed that the statement should note that the timing and overall amounts of the Committee’s asset purchases would continue to be evaluated in light of the evolving economic outlook and conditions in financial markets,” the minutes stated.