WASHINGTON - July 14, 2010 - Federal Reserve officials cut their forecasts for growth this year and signaled they stood ready to take new steps if the economy worsens.

A new document, released Wednesday, revealed a more cautious mood among the Fed policymakers in light of Europe's debt crisis, a volatile Wall Street, a stalled housing market and high unemployment.

With risks growing, Fed officials at their June 22-23 meeting saw the need to explore new options for bolstering the economy. That's a turnaround from earlier this year when they were moving to wind down crisis-era supports.

No new specific steps were disclosed or agreed upon at that time.

However, if the economy continues its downward spiral, Fed policymakers have options. They could revive programs to buy mortgage securities or government debt. They could lower the rates banks pay for emergency Fed loans. The Fed also could create a new program to spark more lending to businesses and consumers in a bid to lure them to ratchet up spending and grow the economy.

The economic and political hurdles for taking such action would be high, economists said.

"If the economy takes a nasty spill, then yes, it would take new policy action. But if we continue to see the kind of mediocre, ho-hum growth (we have been experiencing), then that won't be enough for them to move," said Michael Feroli, an economist at JPMorgan Chase.