The US Federal Reserve held its near-zero interest rate policy Wednesday and announced steps to wind down support of the ailing economy, saying it had "continued to pick up" since September. The policy-setting Federal Open Market Committee (FOMC), headed by Fed chairman Ben Bernanke, said after a two-day meeting that "although economic activity is likely to remain weak for a time." Its policy actions would support economic recovery.
The committee held the federal funds rate at zero to 0.25 percent and said it expects "exceptionally low levels of the federal funds rate for an extended period." The central bank announced steps to scale back its trillion-dollar support of the economy and the financial sector.
The central bank said it would purchase about 175 billion dollars of government debt, down from a previously announced 200 billion dollars, saying the move was "consistent with the recent path of purchases and reflects the limited availability of agency debt." It also said it would buy 1.25 trillion dollars of government agency mortgage-backed securities as previously announced.
"In order to promote a smooth transition in markets, the committee will gradually slow the pace of its purchases of both agency debt and agency mortgage-backed securities and anticipates that these transactions will be executed by the end of the first quarter of 2010."
The FOMC, which approved the monetary policy unanimously, said it would continue to evaluate the timing and overall amounts of its purchases of securities "in light of the evolving economic outlook and conditions in financial markets." "The Federal Reserve is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted."