Fed offers assurances on rates

Countering fears that it will be forced to take action to counter the threat of inflation, the Federal Reserve said today it expects to keep short-term interest rates "exceptionally low" for an extended period.

With the target rate for the federal funds overnight rate at zero to 0.25 percent, the Fed has run out of room for further reductions in short-term rates.But it reiterated a committement to make $1.25 trillion in total purchases of mortgage-backed securities by the end of the year, continuing a program that many observors credit with keeping mortgage rates low.

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