Federal Reserve to hold interest rates until late 2014

The Federal Reserve has announced interest rates will remain at their historic lows until late 2014, which could pave the way for a further bout of quantitative easing.

In its regular policy statement, the Federal Reserve published the interest rate projections of individual committee members for the first time, revealing the majority of its members believe interest rates will remain between zero and 0.25% until 2014.

The central bank said the US economy faces significant downside risks to the economy, adding it expects to maintain a highly accommodative stance for monetary policy.

The policy statement did not announce any new quantitative easing measures, but chairman Ben Bernanke said in a news conference after the meeting low interest rates could give the Fed flexibility to take more action to support the economy, reports the Wall Street Journal.

Meanwhile, the Fed cut its growth forecast slightly, to a range of 2.2%-2.7%, from 2.5%-2.9%.

On a more positive note, the central bank forecast unemployment would fall to 8.2% from its previous prediction of 8.5%.

The Federal Reserve added it expects inflation to drop to 2%, from its current level of 3%.

By publishing interest rate projections, the Federal Reserve is hoping long-term rates will fall, spurring investment, spending and growth.

In August the Fed said rates would stay near zero until at least until mid-2013.