Fed officials sharply downgraded their economic forecast for this year. They projected the economy would grow between 1.8% and 2% this year, well below the range of 2.3% to 2.7% in its last forecast in March.

If they're correct, annual growth would be the worst since 2011 and would be far from the breakout performance some economists had hoped for this year.

In a statement after its two-day policymaking meeting, Fed officials said the economy "has been expanding moderately" after having improved little during the first quarter.

While the housing market "has shown some improvement," central bank policymakers said exports and investments by businesses have been soft.

Central bank policymakers were less optimistic about improvements in the unemployment rate than they were three months ago, though they noted that the pace of job gains had improved.