FEDERAL RESERVE MAINTAINS RECORD-LOW INTEREST RATE

Washington, April 28 (Bloomberg)- Federal Reserve policymakers said Wednesday the economy is recovering at a "moderate pace" and that a pickup in inflation is likely to be temporary, as they agreed to finish $600 billion of bond purchases on schedule in June. The Fed also left its benchmark interest rate in a range of zero to 0.25 percent, where it has been since December 2008.

"The economic recovery is proceeding at a moderate pace and overall conditions in the labor market are improving gradually," the Federal Open Market Committee said in its statement after a two-day meeting. "Increases in the prices of energy and other commodities have pushed up inflation in recent months," and the Fed expects "these effects to be transitory," the statement said.

Chairman Ben Bernanke has signaled he'll maintain record stimulus until job growth accelerates and the recovery is robust enough to withstand tighter credit. The Fed chief has said he expects that a surge this year in fuel and food costs will have only a passing inflationary impact, differing with Fed regional bank presidents who say borrowing costs may need to rise to contain prices.

Policymakers, in a release after the statement, lowered their forecasts for economic growth this year and raised estimates for a key gauge of inflation that excludes volatile food and energy prices. The projections of governors and regional bank presidents were released three weeks sooner than prior practice.

Bernanke said the end of the Fed's $600 billion bond-buying program in June probably won't have a "significant" effect on financial markets or the economy and that the central bank will likely continue reinvesting maturing debt after June.

"We are going to complete the program at the end of the second quarter," he said. "The end of the program is unlikely to have a significant effect on financial markets or the economy”.

In his first news conference, Bernanke said the central bank is likely to keep reinvesting its securities holdings, including mortgage-backed securities, as they mature even after June.

The Fed left its benchmark interest rate in a range of zero to 0.25 percent, where it has been since December 2008, and retained a pledge in place since March 2009 to keep it "exceptionally low" for an "extended period." The central bank will keep reinvesting proceeds of maturing mortgage debt purchased in the first round of large-scale asset purchases that lasted from December 2008 to March 2010.

The range of estimates for growth this year was cut to 3.1 percent to 3.3 percent, from 3.4 percent to 3.9 percent in January. Estimates for the personal-consumption-expenditures index, minus food and energy, ranged from 1.3 percent to 1.6 percent, up from 1 percent to 1.3 percent.

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