When officials met in April, crude oil was trading close to its highest since 2008. Inflation expectations, as measured by the breakeven rate for five-year Treasury Inflation Protected Securities, had climbed to 2.41 percentage points from 1.73 points at the end of 2010. Some inflation pressures have declined in recent months, with the five-year breakeven rate falling to 2 percent.

The national average price of a gallon of gasoline has fallen to $3.63 from a three-year high of $3.99 on May 4, according to the American Automobile Association. After the slide, gasoline prices remain 34 percent higher than they were a year ago, as high prices continue to dent consumer spending and confidence.

The Bloomberg Consumer Comfort Index decreased to minus 45.5 for the period ended July 3 from minus 43.9 the prior week, as consumers' views of the economy slipped to a three-month low.

'Moderate Pace'

In the public statement after its meeting, the FOMC said "the economic recovery is continuing at a moderate pace, though somewhat more slowly than the Committee had expected."

Since that meeting, the Labor Department reported that the economy added 18,000 jobs in June, less than the most pessimistic forecast in a Bloomberg News survey of economists, and the jobless rate unexpectedly rose to 9.2 percent.

"We don't have a precise read on why this slower pace of growth is persisting," Bernanke said in his news conference after the Fed's meeting. Referring to "frustratingly" slow job growth and weakness in the financial and housing industries, Bernanke said "some of these headwinds may be stronger and more persistent than we thought."

In the minutes of the meeting, "several" policy makers said that reallocating workers into new industries and workers losing skills after long bouts of unemployment may have "temporarily reduced the economy's level of potential output."

Lockheed Martin Corp., the world's largest defense contractor based in Bethesda, Maryland, said on June 30 that it plans to eliminate about 1,500 jobs.

Some companies are predicting the economy will pick up later in the year.