Federal Reserve sees pickup in economy

The U.S. Federal Open Market Committee voted Wednesday to slow the pace at which it buys mortgage debt and will end the program three months early.

The committee sets monetary policy for the U.S. central bank, the Federal Reserve. Fed chairman Ben Bernanke and fellow committee members issued a unanimous statement after the meeting, saying economic activity has picked up following the downturn. Financial markets are up, housing activity has increased and household spending has stabilized, although businesses are still cutting back on staff, the committee said. 

It expects a "strengthening of economic growth."

As expected, the committee also voted to keep short-term interest rates unchanged, at 0.25 per cent, adding it expects "inflation will remain subdued."

The Fed embarked on a $1.45 trillion US program to buy mortgage-backed securities and real-estate debt last year as the recession threatened the property market. 

"The Committee will gradually slow the pace of these purchases in order to promote a smooth transition in markets and anticipates that they will be executed by the end of the first quarter of 2010," the committee said after a two-day meeting in Washington. The program was originally due to close at the end of this year. 

Some in the financial services industry have worried that massive government stimulus spending globally will prompt inflation. The Fed has kept its benchmark lending rate at between zero and 0.25 since December.

The committee won't meet again until November.