The Federal Reserve Board scaled back its expectations for the economy Tuesday, vowing to keep interest rates at record low levels and taking a small measure to stimulate a recovery that has lost steam.

The Fed said it will reinvest proceeds from mortgage and other debt that it owns in longer-term Treasury debt. Economists said the measure could stimulate some borrowing by lowering long-term interest rates.

But interest rates have been at or near record lows for months and have failed to achieve the kind of strong recovery most economists would have expected given the severity of the recession that began in December 2007.

"It's been a half-speed recovery at best," said PNC Bank chief economist Stuart Hoffman.

He called the Fed's decision to reinvest proceeds from its debt portfolio "a subtle change." Some economists argue the Fed should provide a stronger stimulus by purchasing more debt.

The Fed acknowledged Tuesday that the pace of the recovery has slowed in recent months. It said consumer spending is being dampened by high unemployment and that credit remains tight. Employers are not boosting their payrolls and nonresidential construction is weak, the Fed said.

Economic conditions, including a subdued, stable outlook for inflation, "are likely to warrant exceptionally low levels of the federal funds rate for an extended period," the statement said.

Fed officials pledged they will use their power "as necessary to promote economic recovery and price stability."

The statement by the Fed's Open Market Committee recognizes "that the economy doesn't have enough momentum to create jobs and increase output levels," said Thomas J. Duesterberg, president and CEO of the Manufacturers Alliance/MAPI, a public policy and economics research organization.

The Fed said it would continue to hold the federal funds rate at 0 to 0.25 percent for an extended period, language it has used following other recent meetings. The central bank has kept the benchmark rate in that range since December 2008.

The federal funds rate is what banks charge each other on overnight loans and is a key determinant of short-term interest rates. Low interest rates usually encourage consumers to borrow, but the Fed noted in its statement that bank lending continues to decline.

Some put the blame on the questionable outlook for the global economy as well as to uncertainty over the regulatory and tax climate. Major tax cuts instituted during the Bush administration are set to expire at the end of the year and there is sharp debate over whether they should be allowed to expire or should be extended.

Mr. Duesterberg said unless those uncertainties are resolved in a way that encourages companies and consumers to invest and spend, "it doesn't really matter how low interest rates are."

"I'm in the camp that believes low interest rates are not the only thing needed to get the job done," he said.

Linda Duessel of Federated Investors said Tuesday's Fed action "should help for those who want to borrow." She said it could be a precursor to the Fed approving more aggressive security purchases at its meeting next month.

But lower interest rates won't encourage borrowing among business owners who are discouraged by tax and regulatory policies, Ms. Duessel said.

"The small businessman has not participated at all," she said. "He's not going to until he sees what he perceives to be a permanent tax cut. I don't know that that's in this administration's playbook."

Concerns of small business were apparent in a monthly survey released Tuesday by the National Federation of Independent Business. The business interest group's Index of Small Business Optimism fell again last month.

"Owners do not trust the economic policies in place or proposed, and they are distressed by global and national developments that make the future more uncertain," said NFIB chief economist Bill Dunkelberg.

Washington correspondent Daniel Malloy writes the "Pittsburgh On The Potomac" blog exclusively at PG+, a members-only web site of the Pittsburgh Post-Gazette. Our introduction to PG+ gives you all the details.