The Federal Reserve improved projections Wednesday for a slumping US economy and the country’s unemployment rate.

Axar.az informs that, the central bank now expects the economy to contract between 5.5% or grow 1% in 2020, an improvement from previous estimates of a 10% to 4.2% contraction made in June.

The world's largest economy shrank at an annual rate of 31.7% during the second quarter, the largest quarterly contraction on record.

Meanwhile, the unemployment rate stood at 8.4% in August and the Fed also made revisions to those projections.

It now forecasts the rate in the range of 6.5% to 8% for 2020, revised down from 7% to 14%.

While the Fed's new policy is to achieve maximum employment to revive the economy, it will allow the inflation rate to climb above its 2% target and stay there for some time.