WASHINGTON, January 25, 2012 (AFP) – The US Federal Reserve on Tuesday cut its US economic growth forecasts and said that amid slow business investment and a depressed housing sector it expected to keep interest rates near zero for another three years.

Despite an upturn in the economy late last year, the policy-setting Federal Open Market Committee said the ongoing weaknesses in the economy and strains in global financial markets mandated continued easy-money policies.

“We continue to see headwinds coming from Europe,” Fed chairman Ben Bernanke said in a post-FOMC news conference.

“I don’t think we’re ready to declare that we have entered a strong phase at this point.”

Bernanke gave no hints as to whether the Fed was ready to add more stimulus to the economy, but left the door open if growth fails to pick up and unemployment remains stubbornly high.

“We need to be thinking about ways in which we can provide further stimulus if we don’t get some improvement in the pace of recovery,” he said.

The FOMC said in a statement that while household spending and consumer confidence had picked up, “growth in business fixed investment has slowed, and the housing sector remains depressed.”

The Fed cut its growth projection for this year to 2.2-2.7 percent, about one-quarter percentage point below the previous forecasts. For 2013, it sees growth edging up to 2.8-3.2 percent, and then accelerating to above 3.3 percent in 2014.

But with the prospects for inflation over the medium term low, the FOMC said it expects to keep its key interest rate at exceptionally low levels “at least through late 2014″ — in parallel with its forecasts for low inflation.

The rate has stood at a rock-bottom 0-0.25 percent for three years, and the Fed had previously projected it would stay at or near that point only through the middle of 2013.

The FOMC for the first time set an explicit inflation target, at 2.0 percent — “basically the number that most central banks use,” Bernanke said — past which it could begin tightening policy.

But Bernanke insisted that, despite the new inflation target, the Fed would not place controlling inflation over boosting employment in its priorities.

“We treat them symmetrically,” he said. “We are going to be even-handed.”

Following recent improvements in the troubled labor market, the FOMC modestly cut its unemployment rate projections to as low as 8.2 percent at the end of this year and 7.4 percent at the end of 2013. Bernanke stressed those levels remained unhealthily high.

The FOMC report released for the first time individual forecasts of interest rate shifts by the FOMC members and alternates, a move aimed at boosting clarity over the central bank’s views of the economy.

Most of the 17 participants predicted that rates would stay below 2.0 percent through the end of 2014, while three clearly saw the possible need to raise rates this year and six in 2013.

Despite those dissenters, said RDQ Economics analysts said, “This is a very dovish FOMC.”