Fed Downgrades U.S. Economic Growth to Modest (WASHINGTON) - The Federal Reserve says the U.S. economy is growing modestly, a downgrade from its June assessment. The Fed expects growth will pick up in the second half of the year, but the more cautious message may signal it's not ready to slow its bond purchases soon. In a statement after a two-day policy meeting, the Fed says it will keep buying $85-billion-a-month in bonds to help lower long-term interest rates. And it says it plans to hold its key short-term rate at a record low near zero at least as long as the unemployment rate stays above 6.5 percent and the inflation outlook remains mild. Stronger job growth has fueled speculation that the Fed could start reducing its purchases soon. But the economic growth remains sluggish and unemployment high at 7.6 percent. MORE: Is Europe's Economy Finally Showing Some Signs of Life? Don't Hold Your Breath