The US Federal Reserve has lowered its outlook for growth this year but is more optimistic about the next two years.
The change likely reflects a series of bold stimulus measures the Fed launched today aimed at boosting the sluggish US economy.
The Fed now expects growth to be no stronger than 2% this year. That is down from its forecast of 2.4% in June and in line with most private economists' predictions.
But it expects growth to accelerate next year to as much as 3%. That is up from June's forecast of 2.8%.
For 2014, the bank projected growth between 3% and 3.8%.
The Fed raised its outlook for 2013 and 2014 after it said it will spend $40 billion a month to buy mortgage bonds for as long as it deems necessary.
It also plans to keep short-term interest rates at record lows near zero until the middle of 2015 - six months longer than previously planned.
Chairman Ben Bernanke said the Federal Reserve does not have a specific economic target for its new US stimulus programme and will keep buying bonds until it sees more jobs, lower unemployment and stronger growth.
"We are looking for ongoing sustained improvement in the labour market," Bernanke told a news conference last night after the Fed announced a series of bold moves to get the economy moving.
"There's not a specific number in mind. But what we've seen in the last six months isn't it."
The Fed also said it is ready to take other unconventional steps if job growth does not pick up.
The Fed still thinks unemployment will not fall below 8% this year. The unemployment rate is currently at 8.1%. It said the rate will fall as low as 7.6% next year and down to 6.7% in 2014. It also expects inflation to remain at or below 2% for the next three years.
Overall economic growth slowed in the April-June quarter to an annual rate of just 1.7%, down from 2% in the January- March quarter and 4.1% in the final three months of last year. Many economists expect growth will remain roughly 2% in the second half of the year, well short of what is needed to make a significant dent in the unemployment rate.
The US economy is growing too slowly to significantly reduce high unemployment. The unemployment rate has topped 8% every month since the Great Recession officially ended more than three years ago. In August, job growth slowed sharply. Employers added just 96,000 jobs, down from 141,000 in July and well below what is needed to bring relief to the more than 12 million who are unemployed.
The unemployment rate did fall to 8.1% from 8.3%. But that was because many Americans stopped looking for work, so they were no longer counted as unemployed.
Earlier the Fed said it would start buying $40 billion of mortgage debt per month and continue to purchase assets until the outlook for jobs improves substantially.
In a significant shift in the direction of US monetary policy, the Fed has tied its unconventional bond buying directly to economic conditions, a move that is likely to be controversial among central bank critics.
"If the outlook for the labour market does not improve substantially, the committee will continue its purchase of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability," the Fed said in a statement.
In an additional step that reflects just how concerned Fed officials have become about the health of the economy, policymakers said they would not likely raise rates from current rock-bottom lows until at least mid-2015. Previously, it had set such guidance at late 2014.
The decision comes in the face of widespread questions about the likely effectiveness of a further foray into unorthodox monetary policy. The latest purchases build on the $2.3 trillion in US government and housing-related debt the Fed has already bought.
The new move is even bolder than many investors had anticipated given its open-ended nature and clear links to unemployment.
