With downturn easing, Fed not eyeing new programs

By Mark Felsenthal

WASHINGTON (Reuters) - The Federal Reserve is unlikely to unveil new programs any time soon to battle the severe U.S. recession as it gauges the impact of plans already in place and assesses whether recent hopeful signs for the economy prove lasting.

At their last meeting in mid-March, policy-makers at the central bank surprised financial markets with plans to pump an additional $1.15 trillion into the economy. In addition, the Fed is already trying to reach new areas of distressed credit markets by expanding unconventional lending programs.

The Fed's policy-setting panel meets again April 28-29, but officials appear unlikely to take any new steps now. Policy-makers have said they see tentative evidence the rapid pace of the economy's steep decline may be slowing.

"The economy is still very weak, but there are some encouraging signs that support cautious optimism," Atlanta Federal Reserve Bank President Dennis Lockhart said on Thursday.

In vastly ramping up its commitment to economy-supporting operations in March, the Fed has now vowed to purchase $1.45 trillion of mortgage agency debt and securities this year and $300 billion in longer-term Treasury securities within the next six months. Markets had been expecting the Fed to go more slowly in expanding its balance sheet and were stunned by the aggressive stance policy-makers displayed.

The Fed's balance sheet already stands at over $2.1 trillion. It was roughly $870 billion when the crisis first struck in August 2007.

FUNDS IN PIPELINE

The central bank is also working on enlarging its program to improve credit market conditions by accepting new commercial mortgage-backed securities and older commercial and residential mortgage-backed securities in various lending programs.