WASHINGTON - THE Federal Reserve concludes a two-day meeting on Wednesday seeking to steer monetary policy amid tentative signs of recovery from the economy's prolonged recession.

Economists expect the Federal Open Market Committee to maintain its near-zero interest rate policy and to reaffirm a commitment to keep pumping money into the economy to battle recession.

The panel led by chairman Ben Bernanke was due to release its statement at the end of the meeting on Wednesday around 1815 GMT (0215 Thursday Singapore time).

Analysts say that although no change in policy is expected, the Fed statement will be critical to the central bank view on the recovery and when it may end its vast stimulative effort some call 'quantitative easing'.

While a change in the benchmark federal funds rate is unlikely, traders are expected to pay close attention to the after meeting communique for clues on the unconventional quantitative easing program and inflation, said Mike Schwager, market strategist at Claymore Securities.

The Fed's job has been complicated by a jump in yields on the bond market, which influences other rates including mortgages that the Fed cannot directly control.

This reflects some renewed fears of inflation once a recovery takes root, but the higher rates could put the brakes on a recovery, say some analysts, who are pricing in a Fed rate hike by the end of this year.

Dean Maki at Barclays Capital said that based on stimulus efforts including the recently passed 'cash for clunkers' measure to spur auto sales, the economy could grow at a relatively strong pace of 2.5 per cent in the third quarter and 3.5 per cent in the fourth quarter after steep declines. But he said the Fed will remain stimulative.

The Fed has already embarked on a massive program to purchase up to 1.2 trillion dollars in government and agency debt in an effort to bring down a variety of interest rates it does not control. -- AFP