Fed: Recovery slower than expected

WASHINGTON -- The Federal Reserve acknowledged yesterday 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 new 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 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. They noted inflation has risen but expect those pressures to be temporary as well.

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.

Stocks fell shortly after Bernanke's acknowledgment. The Fed's statement stood in contrast to its more upbeat view when officials last met eight weeks ago. -- AP