Martin Crutsinger

WASHINGTON: The Federal Reserve says the U.S. economy still needs support from its low interest-rate policies because it is growing only moderately.

In a news release Wednesday after a policy meeting, the Fed said it would keep buying $85 billion a month in bonds to keep long-term interest rates low and encourage borrowing and spending.

Yet the Fed seemed to signal that it thinks the economy is improving despite some recent sluggish data and uncertainties caused by the partial government shutdown.

It no longer expresses concern, as it did in September, that higher mortgage rates could hold back hiring and economic growth. And its statement makes no reference to the 16-day shutdown, which economists say has slowed growth this quarter.

Some analysts said this suggests that the Fed might be prepared to reduce its bond purchases by early next year — sooner than some have assumed.

“The tone was probably more positive on the outlook than most people expected,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics.

Paul Ashworth, an economist at Capital Economics, said he was struck by the absence of any reference to the shutdown. He called the statement “remarkable for what it omits rather than includes.”

The yield on the 10-year Treasury note, a benchmark for rates on mortgages and other loans, rose from 2.49 percent to 2.54 percent. That suggested that investors think rates will rise because of less bond buying by the Fed.

At the same time, the Fed noted again in its statement that budget policies in Washington have restrained economic growth.

And it will stick to its low-rate policy: It reiterated that it plans to hold its key short-term rate at a record low near zero at least as long as the unemployment rate stays above 6.5 percent and the inflation outlook remains mild.

The Fed’s policy decision was approved on a 9-1 vote with Esther George, the president of the Kansas City Federal Reserve Bank, dissenting as she has done at each of the seven meetings this year.