Washington » The Federal Reserve left its benchmark interest rate at record lows Tuesday and affirmed plans to halt its purchase of mortgage-backed securities -- a huge intervention that helped prop up the housing market -- at the end of the month.

In sticking with its deadline for ending those purchases, which will total $1.25 trillion and have helped hold mortgage rates to near-historic lows, the Fed appeared to be expressing a degree of confidence about the economic recovery.

Even as the Fed moved to foster growth and ease high unemployment, its overall assessment of the economy was a bit more upbeat. It said the job market is stabilizing, which was an improvement from its January statement, when it said the deterioration in the labor market was abating.

It also said business spending on equipment and software has risen significantly, an upgrade from its last assessment. Still, the Fed cautioned that spending by consumers could be dampened by high unemployment, sluggish wage growth, lower wealth and tight credit. And it noted weakness in the commercial real-estate and home-building markets.

"The Fed painted the economy in a slightly brighter shade," said Stuart Hoffman, chief economist at PNC Financial Services Group. "It's been painted black for so long. Now, it is a lighter shade of gray."

The Fed held its target range for its bank lending rate at zero to 0.25 percent, where it's been since December 2008. In response, commercial banks' prime lending rate, used to peg rates on certain credit cards and consumer loans, has remained about 3.25 percent -- its lowest in decades.

Super-low rates benefit borrowers who qualify for loans and are willing to take on more debt. But they hurt savers. Low rates are especially hard on people living on fixed incomes who are earning scant returns on their savings.

The Fed's pledge to keep record-low rates for an "extended period" relieved investors. The Dow Jones industrial average finished the day up nearly 44 points. Before the announcement, it had posted a gain in the single digits.

The Fed made no changes to a program to drive down mortgage rates and bolster the housing market, even as a government report Tuesday showed housing construction tumbling in February.

Under that program, the Fed is scheduled to end purchases of mortgage-securities from Fannie Mae and Freddie Mac at the end of this month. Some analysts fear that once the program ends, mortgage rates could rise. That could weaken the recovery in housing and the overall economy. The Fed has left the door open to extending the program if the economy weakens.

Brian Bethune, an economist at IHS Global Insight, thinks 30-year fixed mortgage rates, hovering around 5 percent, could rise to around 5.25 percent to 5.5 percent after the Fed program ends. That increase also would reflect stronger demand for mortgages as people rush to take advantage of a home buyer tax credit that expires at the end of April.

The average rate on 30-year fixed mortgages dipped to 4.95 percent last week, from 4.97 percent a week earlier, according to mortgage finance company Freddie Mac.

The Fed's decision to keep record-low rates for an "extended period" -- thought to mean six more months -- again drew one dissent. Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, for a second straight meeting opposed keeping the pledge.

This time, he expressed concern that low rates could cause a buildup of "financial imbalances" and put the economy's stability at risk. Some analysts took that to mean Hoenig worries that holding rates too low for too long could feed some new speculative bubble in assets such as stocks or commodities.

Tuesday's meeting was the Fed's first one-day session in two years. All the regularly scheduled meetings last year took two days because the Fed needed time to devise unconventional programs to fight the financial crisis.

Traditionally, one-day meetings are more common.