The Federal Reserve has cut its forecast for economic growth in 2012 from 2.9% to 2.4%.
It has also predicted a central unemployment rate of up to 8.2%, having forecast up to 8% on 25 April.
The central bank also extended its programme of swapping short-term bonds for long-term ones, known as Operation Twist, until the end of the year.
The idea of the programme is to cut the long-term cost of borrowing for businesses and households.
The programme is worth $267bn (£170bn).
In a news conference, Federal Reserve chairman Ben Bernanke said unemployment was still too high and was going down too slowly.
“We are prepared to take further steps if necessary to promote sustainable growth and recovery in the labour market,” he said.
The rise in the central prediction of the unemployment rate came after the jobless rate rose from 8.1% to 8.2% in April.
The Federal Reserve Monetary Policy Committee’s decision on Operation Twist was not unanimous, with one of the 12 members voting against it.
Jeffery Lacker, the president of the Richmond Regional Fed Bank, had also voted against the previous three decisions.
Operation Twist involves the Federal Reserve buying bonds that have between six and 30 years left on them and selling equal amount of bonds with less than three years left.
“The Fed was more concerned about the economy than they have been and eased by extending Operation Twist,” said Allen Sinai, chief executive of Decision Economics in New York.
“They appear to be holding more firepower in reserve in case things get worse.”
The central bank’s statement pointed out that “growth in employment has slowed in recent months, and the unemployment rate remains elevated”.
BBC has the full article
