The Fed grows more pessimistic about the economy

The Federal Reserve has sharply lowered its projection for economic activity this year and next, and signaled additional interest rate reductions may be needed to help combat the worst financial crisis to jolt the country in more than a half-century.

The Fed predicts that with the economy forecast to lose traction or maybe jolt into reverse, unemployment will move higher.

Facing the likelihood of “significant weakness” in the economy, some Fed officials suggested “additional policy easing could well be appropriate at future meetings,“ according to documents from the most recent closed-door deliberations on interest rate policy at the end of October.