Fed Signals It Could Increase or Decrease Stimulus

The Federal Reserve is warning America's political leaders that their policies are hurting the economy.

The Fed, after a two-day meeting, is standing by its aggressive efforts to stimulate the economy and reduce unemployment.

But at the same time, it sent its clearest message that tax increases and spending cuts that kicked in this year are slowing the economy. The Fed says that while the job market has shown some improvement in recent months, unemployment remains high and budget policies have begun to restrain economic growth.

In its statement, the Fed maintained its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent from its current 7.6 percent. And it says it will continue to buy $85 billion a month in bonds to try to keep long-term borrowing costs down.

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