THE Federal Reserve has downgraded its assessment of the US economy, saying growth has slowed, but shied away from launching a fresh round of economic stimulus.
"Economic activity decelerated somewhat over the first half of this year," the Fed said at the conclusion of a two-day top-level meeting as it left current monetary policies in place.
The interest rate-setting Federal Open Market Committee said it expected "economic growth to remain moderate over coming quarters and then to pick up very gradually."
"The unemployment rate will decline only slowly."
But there was no new action to juice the economy.
Instead bank policymakers reiterated their pledge to leave interest rates close to zero until the end of 2014 and said they stood ready to act.
The Fed has kept interest rates at historic lows, between zero and 0.25 per cent, since December 2008 in a bid to spur recovery from the Great Recession.
The committee vowed to "provide additional accommodation as needed to promote a stronger economic recovery and sustained improvement in labour market conditions in a context of price stability".
With few tools left in the box and the outlook murky, the Fed has been reluctant to embark on a third round of asset purchases, or quantitative easing, dubbed QE3.
Chairman Ben Bernanke and his colleagues have preferred to wait and see whether a recent slowdown has been a blip, or a harbinger of worse times ahead.