The Federal Reserve issued an even gloomier outlook for the U.S. economy on Wednesday than it did just five months ago.

Chairman Ben Bernanke told reporters the economy will grow no more than 1.7 percent in 2011 and about 2.7 percent in 2012.

Both forecasts are a full percentage point lower than the Fed's June predictions.

At his third news conference this year, Bernanke said the rate of growth will likely remain "frustratingly slow."

"We remain prepared to take action as appropriate to make sure the recovery continues," he said.

The Fed also sees unemployment remaining stubbornly high -- averaging 8.6 percent by the end of next year.

Some economists said the slow recovery makes the Fed more likely to act further to try to boost the economy, though probably not until early next year.

"Policymakers are keeping the door open because the unemployment rate remains high, and there are clear downside risks from the economic situation in Europe," said Sal Guatieri, senior economist at BMO Capital Markets.