Federal Reserve stands pat as recovery slows

The Federal Reserve downgraded its expectations for economic growth Wednesday but offered no new plans to deal with the slowdown.

In a statement released by the Federal Open Market Committee (FOMC), the central bank acknowledged that while the economy continues to recover, it has done so “somewhat more slowly than the committee had expected.”

{mosads}Driving that slowdown is a weaker than expected labor market, coupled with temporary setbacks like higher food and energy prices and supply disruptions caused by disasters in Japan. The Fed also noted that it expects the economic recovery to pick up speed in the coming quarters.

However, despite these challenges, the FOMC gave no indication that additional moves from the central bank were in the works. Rather, as expected, members of the committee unanimously decided to stay the course.

The Fed said it planned to keep the target range for federal funds near zero percent, and that the rate will stay that exceptionally low “for an extended period.”

In addition, the Fed’s second round of quantitative easing, dubbed QE2, will proceed as scheduled, the FOMC said. The central bank will wrap up the program by completing its purchases of $600 billion of Treasury bonds by the end of the month. After that, the Fed will review its holdings on a regular basis, and “is prepared to adjust those holdings as appropriate.”