After leaving interests unchanged from December's 0.00% to 0.25% range, the Fed indicated that while it will not begin purchases at this time it is now prepared to purchase longer-term Treasury securities if evolving circumstances indicate that such transactions would be particularly effective in improving conditions in private credit markets, an indication that a program is in place at this time to make such purchases.

Significantly, the FOMC warned for the first time of increasing deflationary pressures, saying that the Committee sees some risk that inflation could persist for a time below rates that best foster economic growth and price stability in the longer term.

The committee noted that conditions in some financial markets have improved, something which was not in the December statement and that it anticipates that a gradual recovery in economic activity will begin later this year. However, the statement went on to say the risks to that to that outlook remain significant.

With regards to its quantitative easing program, the Fed repeated it stands ready to expand the quantity of such purchases, but added in today's statement that it will extend the duration of the purchase program as conditions warrant.

The Fed is trying to reassure the market that quantitative easing will stay in place for as long as necessary, said Matthew Carniol, chief currency strategist at It's a clear indication the Fed is willing to pull out all the stops in order get the financial crisis under control.

Next month, the Fed plans to launch the $200 billion Term Asset-Backed Securities Loan Facility, which will buy bonds backed by newly issued consumer and small-business loans. The program can be expanded to include other assets.

Jeff Lacker dissented in today's vote, saying he preferred to expand the monetary base at this time by purchasing U.S. Treasury securities rather than through targeted credit programs.