WASHINGTON — The Federal Reserve will "modestly reduce the pace of its asset purchases," and beginning in January will buy longer-term Treasuries at a rate of $40 billion per month and mortgage-backed securities at a rate of $35 billion per month, the Federal Open Market Committee said in a statement released Wednesday following the committee's two-day meeting.

"Taking into account the extent of the federal fiscal retrenchment since the inception of its current asset purchase program, the committee sees the improvement in economic activity and labor market conditions over that period as consistent with growing underlying strength in the broader economy," the FOMC said.

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