Fed to end MBS purchases

Gradual increase in mortgage rates expected

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Mortgage rates are expected to rise gradually as the Federal Reserve left a key short-term interest rate untouched Tuesday, but said it would wrap up $1.25 trillion in purchases of mortgage-backed securities this month.

In a statement, the Federal Open Market Committee said its target for the federal funds overnight rate will remain in the range of zero to 0.25 percent, as inflation is likely to remain "subdued for some time."