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US Federal Reserve - Source: ONE News
The US Federal Reserve says it will extend the duration but not the dollar amount of a programme to buy long-term government securities, and said the economy was showing signs of levelling out after 20 months of recession.
The US central bank, also kept its benchmark short-term interest rate steady near zero and said it would likely stay there for an extended period.
"To promote a smooth transition in markets as these purchases of Treasury securities are completed, the committee has decided to gradually slow the pace of these transactions and anticipates that the full amount will be purchased by the end of October," the Fed said in a statement at the conclusion of its policy-setting meeting.
The Fed debt-buying programme was previously scheduled to expire in September.
US Treasury prices tumbled after the Fed statement in apparent
disappointment that the Fed did not increase the amount of debt
that it plans to buy.
The Fed slashed interest rates to a range of between zero and 0.25%
in December and has pumped hundreds of billions of dollars into the
economy to stimulate economic activity in the worst recession in
decades.
The economy has shown signs it is coming out of its swoon and that job losses, which have already topped 6 million, may be moderating.
The Fed in July forecast that growth would return in the second half of the year after contraction in five out of the last six quarters, but cautioned that unemployment should stay high well into 2011.
To support the fragile economy, the Fed has pledged to keep rates exceptionally low for an extended period.
To quell worries that the Fed's bloated balance sheet may sow the seeds of dangerous inflation once the recovery gains traction, Fed Chairman Ben Bernanke has taken pains to explain the Fed's tools to pull money out of the financial system to prevent price pressures from rising.
