A statement issued after the Federal Open Market Committee met said that economic growth has been 'considerably slower' than expected.
Keeping the inter-bank interest rates low is intended to help make asset purchases and investments affordable for consumers and businesses, and help spur sales.
The Fed cited a deterioration in the labor market, flattening of household spending, a weak commercial real estate market and a depressed residential real estate market as indicators of real economic weakness. Many analysts attributed the slow second quarter to temporary challenges such as rising fuel prices and the supply chain disruptions caused by the Japanese earthquake and tsunami, but the Fed said those factors only account for some of the weakness in economic activity.
The central bank said it now expects a slower pace of recovery in coming quarters than it did at its last meeting, and said 'downside risks' to the economy have increased.
Inflation remains relatively low, the statement said.
