The Federal Reserve is expected to end its buying program of long-term government securities at a meeting that concludes on Wednesday, but keep U.S. interest rates steady at near zero amid signs the economy is stabilizing from a deep recession.

The Fed's policy statement is expected at 2:15 p.m. EDT near the end of a two-day meeting. Policy-makers resumed their gathering at around 9 a.m., a Fed spokesperson said.

Policy-makers will steer a careful course in acknowledging signs a turnaround may be near without triggering expectations that interest rate rises are imminent.

The Fed's decision to refrain from expanding its bond buying while standing pat on rates would contrast with approaches taken by other central banks around the world facing different stages of economic and financial stabilization.

The Bank of England stunned markets last week by expanding its program of bond purchases by a much larger amount than expected, saying the recession is deeper than it had forecast. Norway's central bank held rates steady on Wednesday and opened the door to raising borrowing costs sooner than expected on the belief the Nordic country is faring better with the global downturn than western peers.

The Fed is expected to acknowledge encouraging signs -- including moderating job losses in July -- while reemphasizing that it expects any future growth to be sluggish and accompanied by persistently high unemployment.

The Fed will acknowledge improvement in the economy and the probability of stronger-than-expected growth in the third quarter, but carefully outline downside risks to both growth and inflation, said Joseph Brusuelas, an economist with Moody's Economy.com in West Chester, Pennsylvania.

Economic data has shown improvements in the manufacturing sector and less weakness in housing, but consumers remain reluctant to spend.

U.S. imports rose for the first time in 11 months in June, the Commerce Department reported on Wednesday, although gains were largely due to higher oil prices and imports of consumer goods dropped to their lowest since November 2005. Department store operator Macy's Inc. reported lower sales as a result of weak consumer demand but was able to raise its earnings forecast as a result of cost cutting, which has included eliminating 7,000 jobs.

The Fed is concerned joblessness and the removal of temporary factors down the road, such as the government's cash for clunkers car trade-in program, pose risks to the fragile path to recovery.

Policy-makers also want to lay the groundwork for removing the massive amounts of money they have pumped into the economy to put a floor under the worst recession in decades. They are expected to allow a program to buy $300 billion in longer-term Treasuries run out as scheduled in mid-September.

They will send a clear signal ... that the need for the program, which they thought was strong six months ago, has clearly dissipated and they will continue to wind down the program, said Paul Ballew, head of analysis for insurer and financial services firm Nationwide.

The Fed has shaved interest rates to a range of zero to 0.25 percent and pushed more than $1 trillion into financial markets after the dramatic bursting of the U.S. housing bubble and a subsequent spread of credit defaults pushed financial markets into crisis and sent the economy into a tailspin.

Many analysts worry that the Fed will not be able to raise rates and withdraw money from markets in time to prevent dangerous inflation from sparking.

The Fed's past record of judging when and how to use its tools for regulating the money supply is not impressive, particularly in times of economic distress, commentator George Melloan wrote in an article in the Wall Street Journal earlier this month.

There are also fears a prolonged period of exceptionally low rates would inflate the prices of some assets, just as house prices soared in the early part of the decade before crashing starting in 2006.

Policy-makers argue they have sufficient tools to engineer an exit.

(Editing by Andrea Ricci)

Pennsylvania Inflation