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Fed sounds an upbeat note

THE US Federal Reserve yesterday sounded a cautiously optimistic note about the US economy as it said it would keep its key interest rate unchanged at between 0 and 0.25 per cent.<br /><br />It also announced it would extend the government&rsquo;s $300bn (&pound;182bn) programme to buy Treasury bonds until October.<br /><br />The bond purchase, part of the Fed&rsquo;s quantitative easing programme, had been expected to end next month, and is close to its $300bn limit.<br /><br />The Fed added that it planned to slow the pace of the purchases &ldquo;to promote a smooth transition in markets&rdquo;.<br /><br />Fed chairman Ben Bernanke &ldquo;knows very well the risks associated with removing the stimulus too quickly,&rdquo; Michael Woolfolk from Bank of New York Mellon said.<br /><br />The Fed report said that, while economic activity was levelling out, it was likely to remain weak for a time.<br /><br />&ldquo;Household spending has continued to show signs of stabilising but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit,&rdquo; it said<br /><br />The Fed has held interest rates at between 0 and 0.25 per cent since last December.