Fed to Continue Economic Stimulus Program

The Federal Reserve will extend a program that shifts short-term securities into long-term bonds through the end of this year to foster a stronger economic recovery.

The stimulus action was scheduled to expire on June 30. The extension increases the program by $267 billion to a total of $667 billion.

The Fed launched the program, dubbed Operation Twist, last September. It aims to drive down long-term interest rates, thus reducing borrowing costs for consumers and businesses. Economists opine that continuing the program will have a limited impact.

The central bank cut its forecast for economic growth this year to a range of 1.9% to 2.4%, down half a point from its April outlook. The Fed also now expects the unemployment rate will remain at its May level of 8.2% compared with its previous forecast of 8%.

Central bankers say the economy has been expanding moderately this year, but Europe's debt crisis poses a risk to U.S. growth. Fed policymakers again declared their readiness to take further action as needed to bolster the American economy.

The central bankers also decided to keep reinvesting its maturing debt in federal guaranteed mortgage-backed securities in a bid to ease mortgage lending.

The Fed left its key overnight bank lending rate unchanged in a range of zero to 0.25%. The bank reiterates that it expects interest rates to remain "exceptionally low" at least through late 2014. . Eleven of 12 Fed policymakers voted for the series of actions a larger majority than in recent months.