(Bloomberg News) The Federal Reserve said the economy is still growing modestly and unemployment remains elevated as it maintains $40 billion in monthly purchases of mortgage-backed securities aimed at spurring the three-year expansion.

"Growth in employment has been slow," the Federal Open Market Committee said today at the conclusion of a two-day meeting in Washington. "Household spending has advanced a bit more quickly."

Fed Chairman Ben S. Bernanke is leading a third round of unprecedented bond-buying as he seeks to speed job creation for 12.1 million unemployed Americans. The FOMC, in its last scheduled meeting before the presidential election, repeated today that it would press on with the asset purchases until the labor market improves "substantially."

"Strains in global financial markets continue to pose significant downside risks," the statement said. "Inflation recently picked up somewhat, reflecting higher energy prices." It said longer-term inflation expectations have remained stable.

The Fed left unchanged its statement that highly accommodative monetary policy will be appropriate "for a considerable time after the economic recovery strengthens" and repeated that interest rates are likely to stay near zero "at least through mid-2015."

The Fed said it will continue swapping about $45 billion each month of short-term debt with longer-term securities through December to lengthen the average maturity of its holdings, a program dubbed Operation Twist.

Housing Debt

The central bank will also continue reinvesting its portfolio of maturing housing debt into agency mortgage-backed securities and said it may deploy other "policy tools" as necessary to ensure the labor market improves.

Richmond Fed President Jeffrey Lacker dissented for the seventh consecutive meeting, saying he opposed additional asset purchases. He dissented from the FOMC's June decision to extend Operation Twist through the end of the year along with additional asset purchases under QE3, saying more bond buying probably won't quicken economic growth.

Economic reports since the Fed's last announcement in September have shown that the unemployment rate dropped unexpectedly to 7.8 percent that month, the lowest since January 2009, while retail sales and consumer confidence picked up.

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