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Fed to meet as US recovery splutters

The erratic path of the three-year-old US economic recovery will weigh on Federal Reserve policymakers when they gather this evening.

The meeting comes amid a fresh bout of anxiety over the slow pace of revival in the US.

The Fed's interest rate-setting panel will end two days of meetings  to decide whether more stimulus for the spluttering economy is warranted.

While Fed Chairman Ben Bernanke has sounded more positive about the state of the economy in recent weeks, high petrol prices, slowing job growth and Europe's debt problems will raise Fed fears of another springtime stumble.

In recent years the US recovery has stalled heading into summer due to Middle East revolutions, European debt crises and Japanese earthquakes.

The latest significant setback for the US economy came with March unemployment figures, which showed the unemployment rate dropping to 8.2% but the economy creating a meagre 120,000 jobs.

That puts the Fed in a difficult spot. Unable to cut interest rates further - they are already at close to zero - the Fed will have to decide whether or not to increase controversial asset purchases. The bond and security buying was designed to lower real interest rates, prop up prices and fuel growth-engendering borrowing.

But many inside the Fed remain concerned the measures, know to economists as quantitative easing, will fuel inflation. Outside the Fed, emerging market countries have complained that the moves weaken the dollar, making US exports unfairly cheap.

Faced with a moderate, if uncertain, economic outlook, and good reasons not to push ahead with new stimulus, the Fed is expected to keep what measures it has in place and be prepared to move should things improve or worsen.

Investors will also examine the central bank's economic forecasts and whether it alters its expectation that rates will not rise until late 2014.