Washington ? The Federal Reserve sounded a more confident note Wednesday that the economy is strengthening but pledged to hold rates at record lows to make sure it gains traction.

Wrapping up a two-day meeting, the Fed in a 9-1 decision retained its pledge to hold rates at historic lows for an “extended period.” Doing so will help energize the recovery.

The Fed offered a more upbeat view of the economy even as it noted that risks remain. It said the job market is “beginning to improve,” an upgrade from its last meeting in mid-March. It observed then that the unemployment situation was merely “stabilizing.”

The Fed also noted that consumer spending has “picked up,” an improvement from its last observation that spending was expanding at a “moderate pace.”

Even with the economic gains, the Fed noted reasons to be cautious. High unemployment, sluggish income gains and tight credit are still dampening consumer spending, a major contributor to economic activity. Commercial real estate remains fragile. And though housing activity has edged up, it is still at depressed levels. Bank lending continues to shrink.