In grim report, Fed leaves rate unchanged

The Federal Reserve signaled Tuesday that it is worried about the weakness of the recovery and is ready to take further steps to boost the economy if needed.

Fed officials said they are also concerned that sluggish economic growth could prevent prices from rising at a healthy rate.

But at the end of its meeting, the Fed held off on taking any new steps to rejuvenate the economy and drive down unemployment.

Instead, it hinted that it is prepared to see if the economy can heal on its own.

At Tuesday's meeting, the Fed once again left a key short-term rate near zero, where it has been since December 2008. It also repeated a pledge to hold rates at those ultra-low levels for an "extended period."

The meeting is the Fed's last before the Nov. 2 elections, and it comes as voters are focused on the economy and the jobs crisis. Polls show they are inclined to punish Democrats in Washington for the sluggish economy.

If the economy keeps losing momentum, the Fed will be likelier to provide relief at its next meeting on Nov. 2-3 or at its last regularly scheduled session of the year on Dec. 14.

The Fed used the same language it did in August to sketch a downbeat view of the economy. It concluded that economic activity has slowed in recent months. And it warned that the pace of growth is likely to be "modest in the near term," almost identical to the assessment the Fed made a month ago.

But the Fed delivered a stronger signal that it would take new steps to help the economy. The Fed said it is "prepared to provide additional accommodation." The Fed said it is more worried about prices falling than rising because the economy is so weak. - AP