WASHINGTON (AFP) – The Federal Reserve on Wednesday signaled it is ready to scale back support for the US economy, despite what it called a "moderate" recovery.
Hinting at a second attempt to edge back from crisis-era policies, the Fed said it would complete hundreds of billions of dollars of crisis spending in June as planned.
In a statement, the Fed's top interest-rate setting panel said it "will complete purchases of $600 billion of longer-term Treasury securities by the end of the current quarter."
But it left wide open the possibility of further stimulus efforts if the economic outlook worsens.
"The committee will regularly review the size and composition of its securities holdings in light of incoming information and is prepared to adjust those holdings as needed to best foster maximum employment and price stability."
Last November the central bank was forced to abort a previous attempt to normalize policies, restarting crisis-era spending as fears grew that the world's largest economy could suffer a double-dip recession.
Amid high unemployment, a moribund housing market and still slow growth, Wednesday's move was far from a full-blown retreat.
The Fed kept ultra-low interest rates in place and left open the possibility of keeping recent bond investments steady at $600 billion, rather than let the total value shrink as the assets mature.
"The statement does not rule in or rule out the continuation of QE Lite beyond June," said Stephen Stanley of Pierpont Securities, referring to the plan by its jargon name "quantitative easing".
Meanwhile the bank sounded a still-cautious tone on employment and growth.
"The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually," it said.
That ambiguous stance is unlikely to dampen criticism that the Fed's policies -- along with rising oil and food costs -- could result in a vicious spiral of rising prices that would serve like a tax on consumers.
Yet chairman Ben Bernanke -- who will hold a rare press conference later on Wednesday -- has largely waved off price concerns, insisting that volatile oil and food prices are a poor gauge of long-term inflation.
The Fed statement acknowledged the pain Americans are feeling at the pump, but doubled down on its chairman's verdict.
"Inflation has picked up in recent months, but longer-term inflation expectations have remained stable and measures of underlying inflation are still subdued."
That stance on inflation is just one view that is likely to be probed when Bernanke appears before the press at 14:15 in Washington (18:15 GMT), for the Fed's first-ever post-meeting briefing.
In its 97 years the Federal Reserve has never answered questions after a meeting of its top policy-making panel.
While Bernanke often comments on thorny and even politically charged topics, he usually does so via written statements, speeches delivered verbatim or carefully prepared congressional testimony.
But on Wednesday every ad-lib response about rising petrol prices, Fed stimulus spending and US debt will be parsed by investors, with billions if not trillions of dollars depending on his tone, demeanor and word selection.
"There is little room for error," said Ryan Sweet of Moody's Analytics. "Miscommunication could rattle financial markets and create additional uncertainty."
The markets were subdued immediately after the Fed's initial statement.
US stocks rose slightly, with the Dow Jones Industrial Average gaining around 0.3 percent in the first hour after the statement was released.
The dollar fell against the euro, while the bond market was essentially unchanged.