In a move designed to "provide greater support to mortgage lending and housing markets," the Fed's rate-setting Federal Open Market Committee said it would purchase another $750 billion of top-rated mortgage-backed securities issued by Fannie Mae and Freddie Mac.

Those two mortgage finance titans were seized by the government last September. The new purchases will bring the Fed's total purchases of Fannie and Freddie securities this year to $1.25 trillion.

Additionally, "to help improve conditions in private credit markets," the Fed will purchase up to $300 billion in longer-term Treasury securities over the next six months.

The Fed's benchmark federal-funds rate remains in a range that floats between zero and one quarter of a percent. The Fed statement said that rate _ which influences the prime rate charged by banks to their best customers _ is expected to stay at these historic lows "for an extended period."

The big announcement of heightened Fed intervention to drive loan rates down was preceded by a rundown of grim economic data.

"Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending. Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. U.S. exports have slumped as a number of major trading partners have also fallen into recession," the Fed said, darkly.

Chairman Ben Bernanke made headlines last week for expressing confidence that the recession would end late this year and the U.S. economy would return to growth so long as federal efforts to stabilize the financial sector are successful. Wednesday's Fed statement didn't go that far, noting only that "policy actions to stabilize financial markets and institutions, together with fiscal and monetary stimulus, will contribute to a gradual resumption of sustainable economic growth."

In a nod to concerns that the Fed's assets and liabilities have grown to dangerous levels as the nation's central bank has been virtually printing trillions of new dollars to fight the recession, the statement said that the Fed "will continue to carefully monitor the size and composition of the Federal Reserve's balance sheet in light of evolving financial and economic developments."

"Like all of the measures announced by the Fed as the financial crisis and recession have deepened, today's measures are not a silver bullet," warned Nigel Gault, chief U.S. economist for forecaster IHS Global Insight in Lexington, Mass., in a note to investors. "However, they are one more step in the right direction, and the accumulating force of monetary and fiscal stimulus being aimed at the recession increases confidence that the economy will bottom out in the second half of 2009 and that 2010 will see a resumption of growth."

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