UPDATE 1-U.S. Fed expands Dec policy meeting to two days

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WASHINGTON Nov 20 (Reuters) - The U.S. Federal Reserve, facing a contracting economy and deflation despite extraordinary government interventions, said on Thursday it would expand its December policy meeting to two days to allow additional time for discussion.

The meeting, originally scheduled for Tuesday, Dec. 16, will now begin on the afternoon of Monday, Dec. 15.

The statement of the Fed's policy-making Federal Open Market Committee will be released as previously planned around 2:15 p.m (1915 GMT) on the 16th.

The Fed's January meeting will also take place over two days, Jan. 27-28, as originally scheduled.

The Fed has lowered benchmark interest rates to 1 percent from 5.25 percent since September 2007 in nine steps, including three times between scheduled meetings in 2008. (Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)