President Barack Obama faces a tough fight for re-election next year, though signs of a modest improvement could keep the Federal Reserve on the sidelines as it considers whether monetary policy needs to be looser to aid growth.

The US central bank on Wednesday lowered its growth forecasts and raised its projections for unemployment. While the Fed announced no new measures to stimulate the economy, it said it was considering the possibility of additional mortgage debt purchases.

But with fears of another recession receding, the pressure for more monetary policy stimulus has eased somewhat. Europe's debt crisis could, however, push the recovery off the rails.

The debt crisis, which has rattled global financial markets and pushed consumer confidence to recession levels, remains far from being resolved, and investors are keeping a close eye on developments in Greece.