Federal Reserve officials last month felt they should be ready to consider additional steps to boost the U.S. economy if the  softening outlook took a noticeable turn for the worse.

“As a result of the change in financial conditions, most participants revised down slightly their outlook for economic growth,” minutes of the June 22-23 meeting of the Fed’s policy panel released Wednesday said.
“The committee would need to consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably,” they said.

The minutes did not detail steps the Fed might take if it believed the economy needed more help, but officials and analysts have suggested that buying more longer-term U.S. government debt or mortgage-related securities as possible approaches.

The benchmark Standard & Poor’s 500 stock index ended slightly lower on the Fed’s concerns about the risks to the recovery, while yields for the 30-year Treasury bond fell as investors pushed back their expectations for a tightening in U.S. monetary policy next year.

“It suggests that rates are going to stay low for a long time and if necessary the Fed will try to conjure up some other ways to support the economy,” Ward McCarthy, chief financial economist at Jefferies & Co. in New York, said of the minutes.

Futures markets moved to show traders fully pricing in the first Fed rate hike in August 2011. On Tuesday, they had seen about 98 percent chance of rate hike in June.

A number of Fed officials believed risks to economic growth had shifted to the downside, the minutes said.

While data before the meeting suggested the recovery was proceeding moderately, financial stress tied to Europe’s budget woes could hit consumer and business spending, in the view of Fed officials.

Fed officials trimmed their forecasts for growth this year to  3 to 3.5 percent, from 3.2 to 3.7 percent projected in May.

The unemployment rate, which stood at 9.5 percent in June, was seen averaging about 9.2 to 9.5 percent in the fourth quarter, little changed from their previous quarterly forecast.

Fed officials think it could take years for the economy to return to full health, the minutes showed. Officials believe an jobless rate near 5 percent is consistent with “full employment” but their projections showed the unemployment rate still at about 7 percent by the end of 2012.

Fed officials also revised down modestly their outlook for inflation. Some participants in the meeting saw risks that inflation might slide lower, and a few were worried about a dangerous deflationary spiral.

The central bank has held overnight rates near zero since December 2008 and has pumped more than $1 trillion into the economy to try to spur economic growth.

In a statement after its June meeting, the Fed  struck a cautious tone about the economy, saying only that the recovery is “proceeding,” while renewing its promise to hold rates exceptionally low for an extended period.

The minutes showed that, in general, the Fed believed the flagging of the recovery was modest enough not to call for any additional easing.

Still, Fed officials felt continued labor market weakness would depress consumer sentiment, and they projected house prices to remain flat or decline in the near term.

Even as it contemplated the possibility of further easing financial conditions, the central bank continued discussions at the meeting of how to shrink its vastly expanded balance sheet when the time is right.

Officials debated whether to stop reinvesting maturing Treasury securities or whether to reinvest the proceeds in shorter-dated government debt.