WASHINGTON - And at the end of June, the Federal Reserve finished its work and rested.

The nation's central bank said Wednesday that it would complete the planned purchase of $600 billion in Treasury securities next week as scheduled, then pause its three-year-old economic rescue campaign, leaving in place existing aid programs but doing nothing more, for now, to bolster growth.

At the same time, the Fed said that the economy is expanding less quickly than it had expected. It now projects a growth rate of 2.7 percent to 2.9 percent in 2011, and 3.3 percent to 3.7 percent in 2012. Both projections are considerably below the Fed's April forecast.

"We don't have a precise read on why this slower pace of growth is persisting," Ben S. Bernanke, the Fed's chairman, said at a press conference Wednesday. "Some of the headwinds that have been concerning us, like the weakness in the financial sector, problems in the housing sector, balance sheet and deleveraging issues, may be stronger and more persistent than we thought."

The Fed's policy board, the Federal Open Market Committee, voted unanimously to maintain its two-year-old commitment to hold a benchmark interest rate near zero "for an extended period." Mr. Bernanke said the language means that the Fed will not raise interest rates for "at least two or three meetings," pushing back to November the earliest moment rates could increase. Close watchers of the Fed consider it likely that the central bank will hold interest rates near zero well into next year.

David Fuller's view There are no surprises in today's report by the Fed Chairman, the full text of which can also be accessed by a link in the article above.

In addition to the more publicised problems of sovereign debt and the dubious quality of some 'assets' held by banks in the west, markets have been adjusting to the whiff of stagflation in some of the OECD countries, including the UK and USA.