WASHINGTON (AP) — The Federal Reserve acted Wednesday to lift an economy that's being held back by a weakened job market. It's extending a program designed to spur borrowing and spending through lower long-term U.S. interest rates.

The Fed also reiterated its plan to keep short-term rates at record lows until at least late 2014. And it said it's prepared to act further if the economy deteriorates.

The central bank noted that Europe's debt crisis threatens the economy. Fed officials will be watching for any breakthrough during a summit of European leaders in Brussels next week.

The Fed also sharply lowered its outlook for U.S. growth. It now thinks the economy will grow no more than 2.4 percent this year. That compares with its forecast in April that the economy could grow up to 2.9 percent. And it thinks the unemployment rate, now 8.2 percent, won't fall much further in 2012.

After a two-day meeting, the Fed said in a statement around 12:30 p.m. EDT that it will continue a program called Operation Twist through year's end. Under the program, the Fed has been selling $400 billion in short-term Treasurys since September and buying longer-term Treasurys. It said it will extend the program through December using $267 billion in securities.

But extending Operation Twist might not provide much benefit. Long-term U.S. rates have already touched record lows. Businesses and consumers who aren't borrowing now might not do so if rates slipped slightly more.

David Jones, chief economist at DMJ Advisors, said he expected the extension of Operation Twist to have only a slight effect on long-term rates, perhaps lowering them by about one-tenth of a percentage point.

"This move is largely symbolic," Jones said.

At his quarterly news conference later Wednesday, Chairman Ben Bernanke said the Fed is open to another bond buying program if the job market doesn't improve. The Fed has completed two such programs. Through those programs, it bought more than $2 trillion in Treasury bonds and mortgage-backed securities, expanding its portfolio to more than $2.8 trillion.

Investors seemed unimpressed with the Fed's plans to help the economy through an extended Operation Twist. Stocks were little changed for most of the day, and the yields on Treasury bonds were trading about where they were before the announcement.

But during Bernanke's news conference, stocks began falling. In late-afternoon trading, the Dow Jones industrial average was down about 86 points.

John Canally, investment strategist at LPL Financial, says the Fed delivered just what investors expected and offered a hint at further easing.

"If there's another misstep somewhere — in Europe ... more weak data — the Fed's going to do more," Canally said.

For now, he said, the Fed wants to keep "some powder dry" in case there's a meltdown in Europe. Canally also suggested that the Fed may be reluctant to be aggressive in an election year out of concern it could be seen as affecting the election.

But in a comment on Twitter, Justin Wolfers, an economics professor at the University of Pennsylvania's Wharton Business School, suggested that the Fed might be on the cusp of going further.

Wolfers characterized their view as: "One more bad jobs report and we'll do more."

In its statement, the Fed noted that oil and gas prices have fallen. Lower prices give the Fed room to take further action without igniting inflation. Continued...