The central bank said Wednesday it would keep its bank-to-bank lending rate between 0 percent and 0.25 percent. The Fed also said it would stay the course on a program of buying $300 billion in long-term Treasury notes and $1.25 trillion in mortgage-backed securities.
The plan, which was announced in March, includes buying $200 billion in debt from the National Home Loan Mortgage Corp. and the Federal National Mortgage Association, government sponsored enterprises known as Freddie Mac and Fannie Mae.
The Fed said financial markets "have greatly improved," and consumer spending has stabilized, although it was still "constrained by ongoing job losses, lower house wealth and tight credit."
The business sector remains in a defensive posture, "cutting back on fixed investments and staffing," but recent inventory reductions have brought inventories "better aligned with sales," the Fed said in a statement.
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