The Federal Reserve will continue to coddle the slowly recovering economy at least through the summer, it said yesterday.

The Fed will leave a key short-term interest rate unchanged at between zero and 0.25 percent, where it has been since December 2008, to make sure cheap cash continues to flow freely.

It also plans to close out its plan to buy $1.25 trillion in mortgage-backed securities. The buybacks, which have been helping to support the housing market, are supposed to stop by the end of March but could resume if needed, the Fed indicated in its statement.

Last year, the Fed kicked off its recovery plan by pledging to buy back $1.75 trillion in securities from banks and others to inject cash into the economy. The first round, in which it bought $300 billion in US Treasury securities, ended six months ago, leaving the $1.25 trillion in mortgage paper on the block.

The Fed’s language about short-term rates has remained basically unchanged for a year, with key rates possibly remaining “exceptionally low” for “an extended period of time.” Analysts say that could mean four months or longer.

The Fed’s latest statement said the unemployment rate is “stabilizing,” and that rising inflation isn’t likely to be a concern this year.

(Source: http://www.nypost.com/)