Federal Reserve cites temporary pause in growth, stands by steps to try to reduce unemployment

WASHINGTON – The Federal Reserve says growth “paused” in recent months and reaffirmed its commitment to boost a sluggish U.S. economy by keeping borrowing cheap for the foreseeable future.

The Fed took no new action after a two-day policy meeting. But it stood behind aggressive steps it launched in December to try to reduce unemployment.

Last month the Fed said it would keep its key short-term interest rate at a record low at least until unemployment falls below 6.5 per cent. And it said it would keep buying $85 billion a month in Treasurys and mortgage bonds to try to keep borrowing costs low and encourage spending.

The Fed says the slowdown was because of weather-related disruptions and temporary factors.

Economic growth shrank from October through December for the first time since 2009.