WASHINGTON -- The Federal Reserve upped its forecast for the labor market Wednesday, but Chairman Ben Bernanke cautioned that political battles over federal spending are creating head winds and led the central bank to revise its forecast and project slower growth.The rate-setting Federal Open Market Committee left the Fed's benchmark lending rate near zero, where it's been since December 2008.And the committee kept in place controversial purchases of mortgage bonds and Treasury bonds to spur the economy, at a monthly pace of $40 billion and $45 billion, respectively.Ahead of Bernanke's news conference, the Fed released revised economic projections from 19 Fed governors and district bank presidents. Those experts slightly downgraded growth forecasts for 2013 to within a range of 2 to 3 percent.That's down from a forecast of 2 to 3.2 percent in December.However, the employment outlook improved, and the Fed's experts see the jobless rate at year's end in a range of 6.9 and 7.6 percent. That compares with the range of 6.9 to 7.8 percent offered in December.In the government's latest unemployment reading, for February, the rate improved by two-tenths of a point to 7.7 percent.Addressing reporters, Bernanke said that since December, the economy has seen a return "to modest economic growth following a pause late last year." He cautioned that it's too soon to know whether this is lasting and warned that the budget battles in Washington that sliced $85 billion from federal spending this fiscal year "may slow economic growth and job creation later this year."Several economic indicators have improved markedly in recent months, especially employment and lower first-time jobless claims.The Dow Jones industrial average hit all-time highs this month -- albeit not inflation-adjusted records. The improving economy has led many on Wall Street to speculate on when the Fed might back off its unorthodox efforts to stimulate the economy.Bernanke made it clear that day is not near, anticipating questions on the matter and saying in his prepared remarks that "at this meeting the committee judged that no adjustment was warranted."Peppered on the subject during a wide-ranging question-and-answer session, he acknowledged that markets are correct to ask for numerical targets on future purchases of mortgage bonds and government debt.That would help markets better anticipate how the Fed views the economy.But Bernanke said such information is hard to provide because the efforts, called quantitative easing, have never been done on this scale and Fed members have no consensus.The Fed chief fielded several questions on efforts to break up large banks or restructure regulation to ensure that their failure won't threaten the U.S. economy."It's not just something you can forget about," he said, acknowledging that the Fed is preparing surcharges for the biggest banks and other steps that will require them to set aside more capital to guard against downturns.