Fed slows $1.45T program to aid housing market

With the U.S. economy on the mend, the Federal Reserve on Wednesday said it is slowing the pace of a program to lower mortgage rates and prop up the housing market. The Fed says it will stretch out its goal of buying $1.45 trillion in mortgage-backed securities and debt issued by Fannie Mae, Freddie Mac and Ginnie Mae until the end of the first quarter of 2010. Originally, the central bank intended to complete buying those securities by the end of this year. In a more upbeat assessment, the Fed says: "Economic activity has picked up following its severe downturn." The Fed also decided to hold a key bank lending rate at a record low near zero, and again pledged to keep rates there "for an extended period." Economists predict that means through the rest of this year, and perhaps into part of next year. The central bank also "expects that inflation will remain subdued for some time." On Wall Street, stocks rose on the Fed's more optimistic outlook. The Dow Jones industrial average, which had risen 27 points before the announcement, was up about 80 points roughly 20 minutes after the statement was issued.