The policy, known as quantitative easing or QE3, entails buying $40 billion in mortgage backed securities each month.
The end date remains up in the air, as the Fed will re-evaluate the strength of the economy in coming months.
The Fed also indicated that it plans to keep interest rates at "exceptionally low levels" until mid-2015.
Previously, rates were forecasted to remain low until late 20-14.
The Fed hopes it stimulates the economy merely by signaling to businesses and consumers that it remains committed to keeping credit cheap for the foreseeable future.
The central bank's main objective is to lower interest rates and mortgage rates in particular.
By keeping rates low, the Fed hopes to fuel more spending and eventually, more hiring.