The economy is growing, but only weakly. Layoffs have slowed, yet jobs remain scarce. And interest rates will need to rise _ but not anytime soon.

That was the mixed picture sketched Wednesday by the Federal Reserve, which pledged to hold rates at a record low to reduce unemployment and sustain the recovery. And the assessment was reinforced by government data on inflation, home building and U.S. trade.

Fed Chairman Ben Bernanke and his colleagues did sound a more optimistic note by pointing to the slowdown in job losses. But they made clear the recovery is far from strong: Consumer spending remains sluggish, the job market weak, wage growth slight and credit tight. Companies are still wary of hiring, they said.

In the meantime, the Fed isn't wavering from its commitment to keep its bank lending rate at zero to 0.25 percent, where it has stood since last December. It said again it will keep rates there for an "extended period."

In response, commercial banks' prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will remain about 3.25 percent. That's its lowest point in decades.

Super-low interest rates are good for borrowers who can get a loan and are willing to take on more debt. But those same low rates hurt savers. The rock-bottom rates are especially hard on people on fixed incomes who earn scant returns on savings accounts and certificates of deposit.

Michael Darda, chief economist at MKM Partners, predicted that rates would stay where they are for most of next year.

"We believe the Fed is essentially out of the picture until late 2010 or early 2011," Darda said. The Fed's "optimism was constrained by a long list of caveats," he added.

Low inflation is one sign of the economy's weakness. Companies are finding it hard to raise prices because consumers fearful for their jobs remain wary of spending much.

That was clear from a Labor Department report Wednesday on consumer prices. Prices did move higher last month. But that was mainly because of volatile energy costs.

After stripping out volatile energy and food prices, inflation disappeared last month. That gives the Fed leeway to hold its key interest rate at a record low to aid the recovery.

At the same time, home construction rebounded in November after a setback in October. And applications for new building permits _ a gauge of future activity _ rose more than economist had predicted. A housing recovery is vital to the overall economy.

Also, the government said its broadest measure of foreign trade posted a sharp increase in the July-September quarter, signaling higher demand for foreign goods. That, too, is seen as a sign of a slowly strengthening economy.