Fed still faces challenges keeping economy growing

WASHINGTON – We may be into the second year of the economic recovery, but Federal Reserve Chairman Ben Bernanke and his colleagues are still facing plenty of challenges as they try to keep a fragile expansion on track.

A host of economic indicators have softened in recent weeks and a sharp spike in gasoline prices earlier this year has made consumers and businesses more cautious about spending. The central bank, wrapping up a two-day meeting on Wednesday, is expected to acknowledge the recent soft patch but insist that growth should rebound in the second half of the year.

The Fed is expected stay the course, keeping interest rates unchanged and declaring that it will end on schedule a $600 billion Treasury bond purchase program at the end of this month.

Many private economists believe it will be another full year before the economy has recovered enough for the Fed to actually start raising interest rates.