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Yes, the Federal Reserve’s Open Market Committee kept its interest rate target and language intact in today’s (March 16) statement:

“The Committee will maintain the target range for the federal funds rate at 0 to 1/4 percent and continues to anticipate that economic conditions, including low rates of resource utilization, subdued inflation trends, and stable inflation expectations, are likely to warrant exceptionally low levels of the federal funds rate for an extended period.” [My emphasis.]

Investors were pretty convinced that the Fed would keep the “extended period” language—but not so convinced that there wasn’t some fretting in the hours leading up to the 2:15 p.m. news. The removal of that worry was enough to give the market a push higher immediately after the news.

The vote was the same as it has been recently: Everybody voted with chairman Ben Bernanke except for Kansas City Fed president Thomas Hoenig, who has in recent meetings objected to the “extended period” language.

If you dig a little bit deeper, you’ll see that while the Fed is being cautious on interest rates, Bernanke and company continue to exit the emergency programs they put in place during the depths of the financial crisis.

The Fed, it notes in its statement, has purchased $1.25 trillion of Fannie Mae and Freddie Mac mortgage-backed securities and about $175 billion of debt from those two-entities. The remaining transactions under those programs will be executed by the end of March. Unless market and economic conditions deteriorate that program will be at an end.

The Fed also notes that it has closed almost all the special programs that it used to pump liquidity into the markets during the crisis. The last one, the Term Asset-Backed Securities Loan Facility, is scheduled to end on March 31 for everything except newly issued securities backed by commercial mortgages. That last program will end on June 30.

Ending these programs isn’t the same as pulling all that liquidity that the Federal Reserve pumped into the economy out of the economy. That’s the next step.

After that the Fed can start to look at ending the support of the Fed’s 0% to 0.25% target interest rate.

That support looks likely to be with us for a while yet—but it too will go eventually, most probably around the end of 2010 or the beginning of 2011.