The U.S. Federal Reserve said on Wednesday that the U.S. economic activity has continued to " pick up," and it decided to keep a key interest rate unchanged at a record low of between zero to 0.25 percent to prop up the economy.

Information received recently suggested that "economic activity has continued to pick up and that the deterioration in the labor market is abating," the Fed said.

The housing sector has shown "some signs of improvement" over recent months, said the U.S. central bank in a statement following its two-day policy-making meeting in Washington.

Meanwhile, household spending appears to be expanding at a moderate rate, though it remains constrained by a weak labor market, modest income growth, lower housing wealth, and tight credit.

Businesses are still cutting back on fixed investment, though at a slower pace, and remain reluctant to add to payrolls; they continue to make progress in bringing inventory stocks into better alignment with sales, according to the Federal Reserve.

Moreover, "financial market conditions have become more supportive of economic growth," said the statement, but noting that "economic activity is likely to remain weak for a time."

The Fed said it continues to "anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a strengthening of economic growth and a gradual return to higher levels of resource utilization in a context of price stability."