The U.S. Federal Reserve kept rates unchanged Wednesday. (CBC)

The Federal Reserve will keep the federal funds rate between 0 and 0.25 per cent for an "extended period," the U.S. monetary body said Wednesday.

After two days of meetings, policymakers at the central bank said in a statement they expect to keep rates low “for an extended period” because of the struggling economy.

"Overall, there is nothing in this statement that will suggest any shift in the Fed’s monetary policy stance," TD Bank economist Millan Mulraine said in reaction to the news. "As such, we continue to maintain our bias for the Fed to keep the policy rate unchanged until Q1 2010."

Mortgage plan wound up

The Fed also said it plans to end several programs that inject money into the economy by Feb. 1, 2010, as scheduled.

It is on track to buy a total of $1.25 trillion in mortgage securities from Fannie Mae and Freddie Mac by that time. It has bought $845 billion so far. It's also on pace to buy $175 billion in debt from those groups under the same deadline. So far, nearly $156 billion has been bought.

Since its last meeting in November, the Fed said the economy has continued to pick up, and the “deterioration in the labour market is abating.”

The housing sector has also shown some signs of improvement over recent months.

The Fed said it expects inflation pressures to remain “subdued for some time,” given the available slack in manufacturing facilities and low expectation among consumers that prices will rise.

Currently, U.S. commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, is at about 3.25 per cent. That is its lowest point in decades, and it is linked to the cheap lending that the Fed has offered to banks themselves to stimulate borrowing with consumers and businesses.

Super-low interest rates are good for borrowers who can get a loan and are willing to take on more debt. But those same low rates hurt savers. They're especially hard on people living on fixed incomes who are earning low returns on savings accounts and certificates of deposit.

In recent weeks, Bank of Canada governor Mark Carney has repeatedly warned that Canada's record-low interest rates are temporary, and urged consumers to keep their financial houses in order for when they inevitably go back up.

With files from The Associated Press