• Large and increasing level of government debt runs risk of serious economic consequences
• Long way before labor market can be said to be operating normally
• Fed will continue to monitor situation in Europe closely, and take every available step to protect US financial system and economy
• There are concerns that have been weighing on US business investment
• Inflation has declined and Fed expects it to remain subdued
• Signs economy has declined and Fed expects it to remain subdued

Says:

• Euro governance to be determined this year
• Closer economic union to complement monetary union
• Recession to be ‘much nastier' if crisis not resolved
• EU going through a ‘mild recession'
• EU undertaking reformation of Europe'
• Portugal making ‘good progress' on fiscal reforms
• Greek PSI agreement by the end of the week
• Greece must make ‘decisive progress' on reforms

• Sees 2013 GDP increasing to 2.1%.
• Cuts 2012 GDP forecast to 0.5% from 1.2%.