zz Fed holds steady in face of weak data

WASHINGTON (MarketWatch) — The Federal Reserve pressed ahead Wednesday with its $85 billion-a-month asset purchase program but made few changes to its economic outlook despite a recent spate of poor economic reports for March.

In its policy statement, the Fed stressed that it was flexible, saying it was prepared to either “increase or reduce the pace of its purchases to maintain appropriate policy accommodation as the outlook for the labor market or inflation changes.”

Fed Chairman Ben Bernanke had previously said the Fed was flexible, but this is the first time it was included in the statement.

After starting the year brightly, the economy has started to look sluggish in recent weeks. At the same time, inflation has been softening and remains well below the Fed’s 2% target.Read more on recent economic data

Many analysts had thought the Fed would downgrade its view on the economy.

Instead, the Fed repeated that the economy is expanding at a “moderate pace.”Read text of FOMC statement.

Economists tend to blame tighter fiscal policy for the slowdown, and the one change the Fed made to the statement in its description of the economy was to say that fiscal policy is restraining growth.

Most analysts still think the economy will rebound in the second half of the year, allowing the Fed to begin to taper its asset purchases.

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Federal Reserve Board Chairman Ben Bernanke speaks during a news conference at the Federal Reserve headquarters March 20, 2013

But if the slowdown continues, these estimates may have to be pushed back.

The vote at the meeting was 11 to 1. Kansas City Fed President Esther George dissented for the second straight meeting.

The Fed will meet next on June 18-19 and Fed Chairman Ben Bernanke will hold a press conference.

The minutes of this two-day meeting will be released on May 22. Economists expect there to be an active discussion of the factors behind the weaker inflation.