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WASHINGTON — The Federal Reserve’s policymakers face an unusual conundrum as they meet this week: a short-term economic outlook that is worsening even while the longer-term picture is brightening thanks to the emergence of coronavirus vaccines

The U.S. economic recovery remained moderate across much of the country, and showed signs of a slowdown in areas where coronavirus cases are particularly high, according to a Federal Reserve report.

Federal Reserve Chair Jerome Powell warned of a weak U.S. recovery without sufficient government aid and said providing too much stimulus wouldn’t be a problem.

Federal Reserve Bank of St. Louis President James Bullard, in the most upbeat comments by a central banker since the start of the COVID-19 outbreak, said the U.S. economy may surge at a 35% annualized rate in the third quarter and the nation may be close to a complete recovery by year-end.

The Federal Reserve left interest rates near zero and signaled it would hold them there through at least 2023 to help the U.S. economy recover from the coronavirus pandemic.

Oil extended gains above $40 a barrel in New York as shrinking crude stockpiles and speculation that the Federal Reserve will keep interest rates low raised hopes that an economy ravaged by the pandemic may be on the mend.

The latest Federal Reserve survey of U.S. economic activity found generally modest gains in August but also pessimism about the future given the threats posed by the coronavirus.

The Federal Reserve looks likely to keep short-term interest rates near zero for five years or possibly more after it adopts a new strategy for carrying out monetary policy.

U.S. central bankers noted the rebound in consumer spending at their last meeting but repeated their view that the path of the recovery would depend on containment of the virus.

WASHINGTON — The Federal Reserve expressed concern July 29 that the viral outbreak will act as a drag on the economy and hiring in the coming months and said it plans to keep its benchmark short-term interest rate pegged near zero.