US Federal Reserve on Wednesday held a key interest rate unchanged at a record low of between zero to 0.25 percent while announcing new steps to help lift the country out of the longest recession in a quarter century.

To provide greater support to mortgage lending and housing markets, the central bank announced it will buy up to an additional US$750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to US$1.25 trillion this year.

It also will increase its purchases of debt issued or guaranteed by the nation's two mortgage giants Fannie and Freddie this year by up to US$100 billion to a total of up to US$200 billion.

Moreover, it will buy up to US$300 billion in long-term US Treasury bonds over the next six months to help improve conditions in private credit markets.

Doing so would help the ailing economy because many kinds of debt -- from mortgages to corporate bonds -- are linked to Treasury rates. Fed purchases could boost Treasury prices and drive down their rates. That would ripple through and lower rates on other kinds of debt.

In addition, the Fed said that the one-trillion-dollar program created by the central bank and the Treasury Department to spur consumer and business lending could be expanded to include other financial assets.

The program, which is rolling out this week, currently is focused on boosting lending for auto, education, credit cards and loans for business equipment.

In a statement following a two-day long policymaking meeting, the Fed said that the US economy continued to contract since last meeting in January.

"Job losses, declining equity and housing wealth, and tight credit conditions have weighed on consumer sentiment and spending," it said.

Weaker sales prospects and difficulties in obtaining credit have led businesses to cut back on inventories and fixed investment. And US exports have slumped as a number of major trading partners have also fallen into recession, said the Fed.

Still, the central bank hopes that its actions and steps taken by the Obama administration eventually will help revive the economy.

"Although the near-term economic outlook is weak, the committee anticipates 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," the Fed said.