(Updated to include further detail from the FOMC statement.)



) -- As widely expected,

Federal Reserve

policy chiefs left the key interest rate untouched Wednesday at its record-low level of nearly zero.

The Fed also made its stock reiteration that economic conditions will likely make it necessary to keep rates at historically low levels "for an extended period."

On the economic front, the Federal Open Market Committee said in its statement that data received since its last meeting in June indicates that economic activity is "leveling out," a remark that gives more credence to the belief among many market observers that the recession could be ending.

The Fed governors remained cautious, as is their wont, saying that businesses are still cutting back on fixed investments. It stood fast on its position that inflation will remain "subdued for some time."

Investors were also looking to the Fed's bulletin, which capped a two-day meeting with Chairman Ben Bernanke and his colleagues, for insight into whether the central bank might begin to unwind federal programs put in place to heal the financial system in the wake of the credit crisis.

To that end, the Fed said it will slow the rate of its purchase of Treasury bonds, a program it had put in place as a way to reduce interest rates on mortgages and other consumer debt.

As expected, the Fed will buy $300 billion worth of Treasuries by October, at which point it will likely end the program, which some economists had criticized for ineffectiveness.

-- Written by Scott Eden in New York

Copyright 2009 TheStreet.com Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.