WASHINGTON >> The Federal Reserve is extending a program designed to drive down long-term interest rates to spur borrowing and spending.

The Fed said today that hiring has weakened and the economy needs more support. It reiterated its plan to keep short-term rates at record lows until at least late 2014. And it said it’s prepared to act further if the economy deteriorates.

The Fed announced its action in a statement after a two-day policy meeting.

The central bank will continue a program called Operation Twist through year’s end. Under the program, the Fed has been selling $400 billion in short-term Treasurys since September and buying longer-term Treasurys. It said it will extend the program through December using $267 billion in securities.

But extending Operation Twist might not provide much benefit. Long-term U.S. rates have already touched record lows. Businesses and consumers who aren’t borrowing now might not do so if rates slipped slightly more. 

Stock indexes dipped briefly after the Fed’s announcement, then went back to roughly where they were trading just before.

The interest rates, or yields, on long-term Treasury debt slipped as traders anticipated that the Fed will buy more of them. The yield on the 10-year Treasury note dropped to 1.64 percent from 1.66 percent just before the Fed’s statement. Bond yields and prices move in opposite directions.

The Fed has more leeway to act because inflation has declined. The Fed noted that oil and gas prices have fallen.

The statement was approved on a 11-1 vote. Jeffery Lacker, president of the Richmond Regional Fed Bank, dissented for the fourth straight meeting. The statement said he opposed the continuation of Operation Twist.

The U.S. economy looks weaker than it did when the Fed last met in April. Growth was more sluggish in the first three months of the year than first estimated.

Job growth averaged only 73,000 in April and May, after average gains of 226,000 per month in the first three months of the year.

The number of people seeking unemployment benefits has risen about 5 percent in the past six weeks, and employers posted sharply fewer job openings in April compared to the previous month.

And economists worry the debt crisis in Europe is worsening, even after Greek election results increased the likelihood that Greece will stay in the euro currency alliance.

Still, U.S. inflation is tame. Gas prices have dropped sharply since peaking in April. And core consumer prices, which exclude volatile food and energy costs, have risen just 2.3 percent in the past 12 months. That’s close to the Fed’s 2 percent target for inflation. Lower prices give the Fed more room to act to boost economic growth without fear of triggering high inflation.

Yet it’s unclear whether any further Fed action would help the economy much. Long-term U.S. interest rates have already touched record lows. Businesses and consumers who aren’t borrowing now might not be moved to do so if rates slipped a bit more.  

Critics have complained about the Fed’s efforts to boost growth over the past three years by purchasing more than $2 trillion in bonds. They say the extra money added to the banking system could ignite inflation once the economy rebounds.

This week’s Fed meeting was the first time that the Fed board has been at full strength in six years. Jeremy Stein, a Harvard economics professor, and Jerome Powell, a former private equity executive, attended their first policy meeting since being confirmed by the Senate last month.