Fed continues to taper following cut in growth forecast

US Federal Reserve Chair Janet Yellen speaks during a press conference at Federal Reserve Board building in Washington D.C., capital of the United States, June 18, 2014. (Xinhua/Bao Dandan)

The U.S. Federal Reserve announced Wednesday that it will continue tapering its monthly bond purchase program by another 10 billion U.S. dollars next month, after lowering its growth forecast for the world's largest economy this year.

It was the Fed's fifth consecutive cut of its monthly stimulus program and brought down the amount of purchases to 35 billion U. S. dollars a month, staying on track to end the program later this year.

Meanwhile, the central bank cut its forecast for U.S. economic growth this year, as the revised data from the Commerce Department showed that U.S. economy shrank at an annual rate of 1 percent in the first quarter due to harsh wintry weather.

The Fed predicted the U.S. economy would expand at a rate of 2. 1 percent to 2.3 percent this year, down from its last projection of 2.8 percent to 3.0 percent given in March.

The central bank kept its growth forecast for 2015 and 2016 totally unchanged, as it saw gradual improvement in the economic recovery in recent months. The U.S. economy is expected to grow at a rate of 3 percent to 3.2 percent in 2015 and 2.5 percent to 3 percent in 2016.

"Information received since the Federal Open Market Committee met in April indicates that growth in economic activity has rebounded in recent months," the Fed said in a statement released after a two-day meeting of its Federal Open Market Committee (FOMC) , the Fed's chief body for monetary policy.

The central bank also said that the labor market indicators " generally showed further improvement" and consumer spending " appears to be rising moderately," while the recovery in the housing sector "remained slow."

"Overall, the Committee continues to see sufficient underlying strength in the economy to support ongoing improvement in the labor market," Federal Reserve Chair Janet Yellen said at a press conference.

The central bank projected the unemployment rate to stay at around 6 percent to 6.1 percent by the end of this year, compared with 6.1 percent to 6.3 percent in the March estimate.

The Fed also said it's appropriate to keep its benchmark short- term interest rates near zero "for a considerable time" after the bond purchase program ends, especially if projected inflation " continues to run below the Committee's 2 percent longer-run goal."

There's "no mechanical formula for what a considerable time means," Yellen noted, backing away from the time frame of "around six months" she described in her last press conference in March. " It depends how the economy progresses."

According to forecasts released by the Fed Wednesday, 12 Fed officials believe that the central bank will start raising interest rates some time in 2015.