Although information suggests economic activity continues to “pick up,” the Federal Open Market Committee said yesterday it will keep “the target range for the federal funds rate at 0% to 0.25% and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.”

Substantial resource slack will “dampen cost pressures and with longer-term inflation expectations stable, the committee expects that inflation will remain subdued for some time,” the FOMC said.

The statement said the Federal Reserve will purchase a total of $1.25 trillion of agency mortgage-backed securities and about $175 billion of agency debt and slow the rate of its purchases of agency debt and mortgage-backed securities.

The FOMC said the Fed “is monitoring the size and composition of its balance sheet and will make adjustments to its credit and liquidity programs as warranted.”

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