Fed sees some strength in economy, 'strains' globally

— -- The Federal Reserve is holding off on any new action to help the U.S. economy because stronger growth is giving it time to gauge the impact of steps it's already taken.

Fed policymakers made that announcement Wednesday after a two-day meeting.

In its statement released after the meeting, Fed policymakers said the economy has strengthened and consumers have stepped up spending. But they said the economy continues to face significant downside risks, including strain in global financial markets — a reference to the crisis in Europe.

The Fed left open the possibility of taking further steps to try to boost the sluggish economy. But it gave no hint as to what those moves might be.

The vote was 9-1. Charles Evans, president of the Chicago Federal Reserve Bank, dissented. The statement said he wanted to take stronger action.

After their September meeting, policymakers said they would shuffle the Fed's investment portfolio to try to further reduce long-term interest rates. And in their previous meeting in August, they had said they expected to keep short-term rates near zero until at least mid-2013, unless the economy improved.

The Fed repeated the mid-2013 time frame in its statement Wednesday, and also said it is continuing its program to rebalance its securities portfolio to try to lower long-term rates.

The Fed has kept key short-term interest rate at a record low since December 2008. This is the rate banks charge each other on overnight loans. It serves as a benchmark for millions of business and consumer loans.

Later today, at 2:15 p.m. ET, the Fed will also release its economic forecasts, and Chairman Ben Bernanke will hold a press conference.

The debt crisis in Europe could force the Fed to lower its economic projections. The Greek prime minister's surprise move to call a referendum on the country's latest rescue plan sparked fears that the European debt deal could unravel, that Greece could default on its debt and the crisis could infect the global financial system.

Even if Europe dodges a financial catastrophe, many economists believe it's headed for a recession that would affect the U.S. and global economies. The Fed expressed such concerns after its August meeting.

Still, the Fed remains divided on what, if any, action to take next.

The actions taken in August and September were taken on 7-3 votes, the most dissents in nearly 20 years.

Three regional bank presidents — Richard Fisher of Dallas, Charles Plosser of Philadelphia and Narayana Kocherlakota of Minneapolis — all voted no. They have expressed concern that the Fed's policies could lead to inflation later.

On the other hand, Vice Chair Janet Yellen, Governor Daniel Tarullo, Evans and New York Fed President William Dudley have said the economy is at risk and might need more support.

Two officials pushed for bolder action at the September meeting, according to minutes. The members discussed more bond-buying. Some said it should remain an option.

A brighter outlook for the economy has given the Fed more room to wait. The economy grew at an annual rate of 2.5% in the July-September period — the best quarterly performance in a year. That was largely because consumers increased their spending at triple the rate of the previous quarter.

The growth is strong enough to show that the economy isn't about to slide into recession. Still, growth would have to be nearly twice as high — consistently — to make a major dent in the unemployment rate, which has been stuck at 9.1% for three months.

Most economists had predicted that the Fed would hold off on new action until its December meeting or early next year. The next step could be further clarity on its interest-rate policy.

Evans has proposed that the Fed set benchmarks for raising rates. For example, it could agree not to raise short-term rates until unemployment fell below 7% or the outlook for inflation exceeded 3%. The unemployment rate has hovered around 9% for more than two years, and the Fed's inflation outlook is under 2%.

Yellen, who heads a Fed panel examining ways to improve the central bank's communications, has cautioned that such benchmarks could confuse investors. She has suggested that the Fed could add further guidance when it provides its economic forecasts four times a year.