Washington, Nov 04 2009 (IFR) - The Federal Open Market Committee (FOMC) today announced that it will only purchase about $175 bln of agency debt, slightly less than the $200 bln it previously announced. The Committee said that while reduced, the sum is still "consistent with the recent path of purchases and reflects the limited availability of agency debt."

The Committee also unanimously decided to keep its key federal funds rate unchanged, as expected, at a range between 1 and 1/4 percent. It continues to anticipate that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period," an expectation it has repeated in every release since March.

The Fed now says household spending "appears to be expanding," a more optimistic outlook than the stabilization path Fed members saw in September.

The Fed repeated its assumption that economic activity will "likely remain weak for a time" and that stimulus measures combined with market forces will contribute to a gradual resumption of growth "in a context of price stability."

The Fed continues to see inflation as remaining "subdued for some time," helped by substantial resource slack that is "likely to continue to dampen cost pressures." tessa.moran@thomsonreuters.com /wash/wash

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