Fed dials back predictions for 2012 growth, unemployment

WASHINGTON -- The Federal Reserve has downgraded its outlook for economic growth this year but is slightly more optimistic about the unemployment rate.

The Fed expects the economy to grow between 2.2 percent and 2.7 percent this year. That's down from November's forecast of between 2.5 percent and 2.9 percent.

But it sees unemployment falling as low as 8.2 percent, an improvement from November's bottom rate of 8.5 percent.

The updated quarterly forecast also shows that some Fed members wanted to extend the period of record-low interest rates beyond 2014.

Earlier Wednesday, the Fed said in its policy statement that it doesn't plan to raise its benchmark interest rate before 2014.

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The Fed also offered a firmer target for inflation -- 2 percent -- in a statement of its long-term policy goals.