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Fed downgrades its outlook for US economy

WASHINGTON (AP) - The Federal Reserve has a more downbeat outlook on the U.S. economy for 2013 and 2014 than it did three months ago.

The Fed predicts that the economy will grow just 2 percent to 2.3 percent this year, down from its previous forecast in June of 2.3 percent to 2.6 percent growth.

Next year's economic growth will be a barely healthy 3 percent, the Fed predicts.

But the Fed's policymakers expect the unemployment rate to fall to 7.1 percent to 7.3 percent by the end of 2013, slightly below its June forecast of 7.2 percent to 7.3 percent. It predicts that unemployment will fall as low as 6.4 percent next year, down from 6.5 percent in its June forecast.

The unemployment rate is now 7.3 percent.