Fed: Hey, the Economy Is Growing Slower than We Expected

From the Associated Press:

The Federal Reserve acknowledged Wednesday that the economy is growing more slowly than it expected. But it said it will complete its $600 billion Treasury bond buying program by June 30 as planned and announced no further efforts to boost the economy.

Ending a two-day meeting, the Fed repeated a pledge to keep interest rates at record lows near zero for “an extended period,” a promise it’s made for more than two years.

Fed officials said in a statement that they think the main causes of the economy’s slowdown, such as high gas prices and supply disruptions from Japan’s disasters, are temporary. Once those problems subside, Fed officials said the economy should rebound.

But at a news conference after the statement was released, Federal Reserve Chairman Ben Bernanke acknowledged that some of the problems slowing the economy could persist into next year.

“Maybe some of the headwinds that are concerning us, like weakness in the financial sector, problems in the housing sector … some of these headwinds may be stronger and more persistent that we thought,” Bernanke said. He was responding to a question about whether more permanent factors had led to the dimmer outlook.

Initially, the Fed announcement had little effect on the stock and bond markets. But stocks fell later in the day, shortly after Bernanke acknowledged that some of the problems affecting the economy may go beyond temporary factors. The Dow Jones industrial average closed down 80 points for the day.

Read the whole thing here.