The Marriner S. Eccles Federal Reserve building in Washington. (Andrew Harrer / Bloomberg )
WASHINGTON -- Reflecting recent improvement in the jobs market, the Federal Reserve on Wednesday brightened its forecast for the unemployment rate while leaving its broader projections for economic growth and inflation little changed.
In its quarterly outlook, the Fed said the unemployment rate would be 7.4% to 7.7% at the end of 2013, down from the September forecast of 7.6% to 7.9%.
The rate still is not projected to drop below 7% until at least 2014, and would not hit 6.5% until at least 2015, largely the same as the September forecast.
The projections came as Fed policymakers took the unprecedented step of tying interest rates to specific unemployment and inflation targets -- with 6.5% unemployment a key level.
On Wednesday, the Federal Open Market Committee said it would keep short-term interest rates near zero until the unemployment rate fell to 6.5% or lower and the long-term outlook for inflation topped 2.5%.
Previously, the Fed used a more vague time-range target, saying it was unlikely to raise its benchmark interest rate until at least mid-2015.
Quiz: How much do you know about the 'fiscal cliff'?
The unemployment rate was 7.7% in November, down from 8.7% a year earlier. The rate's recent peak was 10%, in October 2009 in the aftermath of the Great Recession.
The Fed projected the economy would grow 2.3% to 3% in 2013, compared with its September projection of 2.5% to 3%. Growth in 2014 would be 3% to 3.5%, compared with a September forecast of 3% to 3.8%.
The economy grew at annual rate of 2.7% in the third quarter, up from 1.3% in the second quarter. But economists expect growth to drop off in the fourth quarter.
US Unemployment Rate data by YCharts
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