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The Federal Reserve on Wednesday decided against tapering the massive bond-buying program that has been in place since last September.
Markets were expecting a $10 billion reduction in the monthly pace of the Fed's quantitative easing purchases, from $85 billion to $75 billion.
The Federal Open Markey Committee maintained unprecedented support measures in the wake of a disappointing August jobs report that raised concerns about the pace of the U.S. economy recovery.
U.S. employers added about 169,000 jobs last month, but the workforce participation rate fell to its lowest level since 1978, meaning more Americans are giving up looking for work.
"The Committee remains concerned that, without sufficient policy accommodation, economic growth might not be strong enough to generate sustained improvement in labor market conditions," the Fed's accompanying statement said. "Furthermore, strains in global financial markets continue to pose significant downside risks to the economic outlook."
The Fed wants "more evidence that progress will be sustained before adjusting the pace of its purchases."
Accordingly, the Committee decided to continue purchasing additional agency mortgage-backed securities at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month
In addition to concerns about the labor market, analysts say the Fed was worried that tightening monetary policy would derail the housing recovery by pushing mortgage rates higher.
The asset purchase program has kept long-term interest rates relatively low, spurring a revival of the housing sector. Home prices are up sharply after bottoming out in the aftermath of the 2007 credit crash, and the average home takes only 3.3 months to sell.
Federal Reserve Chairman Ben Bernanke will hold a 2:30 pm ET press conference to explain the decision.
It is expected to be Bernanke's final meeting with reporters, as his second term as chairman expires in January.
Bernanke, who helped to guide the national recovery from the worst recession in decades, insists he will not seek another term.
The job may go to Janet Yellen, a former president of the San Francisco Fed who has been the Fed's vice-chair since 2010. Yellen would be the first female to lead the central bank.
Other candidates reported include former vice-chair Donald Kuhn and former treasury secretary Tim Geithner.
Prominent economist Larry Summers, thought to be favored by President Barack Obama, withdrew his name from consideration amid talk of a rough path to confirmation.
