WASHINGTON ( TheStreet -- Members of the Federal Open Market Committee downgraded their economic growth and inflation forecasts as macroeconomic data and concerns about Europe's fiscal situation suggested that expansion would be slower than projected at its April meeting.

"While the recent data on production and spending were broadly in line with the staff's expectations, the pace of the expansion over the next year and a half was expected to be somewhat slower than previous predicted," according to minutes from the Federal Open Market Committee's June 22-23 meeting . The meeting notes indicated that deepening concerns among investors regarding Europe's credit crisis strengthened the U.S. dollar and depressed equity prices, "which seemed likely to damp somewhat the expansion of domestic demand."

Despite the committee's diluted outlook -- it now expects real 2010 GDP growth of between 3% and 3.5%, down from April's projected range of 3.2% to 3.7% -- and some members' feelings that risks to the outlook have shifted to the downside, a moderate recovery is still expected. Members also said additional policy accommodation wasn't warranted but agreed to "consider whether further policy stimulus might become appropriate if the outlook were to worsen appreciably."

FOMC members continue to believe that real estate market weakness, feelings of financial uncertainty across households and businesses, minor improvements in the job market, challenging credit conditions and declining fiscal stimulus will weigh on the recovery. Furthermore, the committee expects that it could take roughly five to six years for unemployment, output and inflation to stabilize to more sustainable levels.

As he has in the past several meetings, Kansas City Federal Reserve President Thomas Hoenig was the only member to disagree with the FOMC's statement that economic conditions would warrant an exceptionally low federal funds rate for an extended period.

-- Written by Melinda Peer in New York.