IMF Cuts Forecast; Fed Ready to Act

According to the International Monetary Fund (IMF), the US economy isn’t going to grow as fast as they initially projected.  In June, they projected a rate of 2.5% for 2011, but recently reduced their expectations to 1.5% 

The slowing growth has prompted officials at the Federal Reserve to attempt various new tactics to kick-start the economy.  The Fed plans to institute what would be called “Operation Twist” – meaning that they will swap short term treasury notes for long term bonds.  However, almost ⅔ of economists expect that the move will fail to reduce the current unemployment rate.

Currently, most economists are projecting growth to fall somewhere between 1.5 and 2.5%.  That is a more optimistic view than that of the IMF, but growth that low should fail to stimulate enough job growth to have a meaningful impact on the unemployment rate.

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