RENEE MONTAGNE, Host:
Time now for business news.
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MONTAGNE: For the first time in more than two years, Federal Reserve officials have not raised interest rates. They said economic growth has moderated from the strong pace it reached earlier this year.
Still, officials haven't closed the door on raising rates. NPR's Jim Zarroli reports.
JIM ZARROLI: Since June, 2004, the Fed's Open Markets Committee has raised the federal funds rate at 17 consecutive meetings in an effort to keep the economy from overheating. Yesterday, committee members decided to take a pause. The decision comes at a time when the nation's annual growth rate - which was so strong earlier this year - has fallen. And the job market has grown weaker then expected.
Diane Swonk, chief economist at Mesirow Financial, says there's another problem facing the economy.
DIANE SWONK: The uncertainty about how much the housing market's going to correct and how much everything from mortgage refinancing coming to an end to the end of the home buying boom is going to affect the economy. Nobody knows for sure.
ZARROLI: But, fed officials made clear they could begin tightening again as soon as September. They noted that the core inflation rate remains elevated, and commodity prices - especially oil - keep rising. That means inflation pressures could be building under the surface.
One member of the fed's Open Market's Committee, Jeffrey Lacker, dissented from the vote, saying it was too soon to quit tightening. Mark Vitner is senior economist at Wachovia Corporation.
MARK VITNER: The signals are very mixed right now. I mean, there's no doubt that the economy is slowing, but we've seen no evidence that inflation is about to top out.
ZARROLI: With the economic picture so muddied, it's not clear how long interest rates will stay where they are, and investors seemed confused by the fed's action. Stock prices rose after the decision was announced, but they later fell again after investors had some time to digest the news. Bond prices also ended the day down.
Jim Zarroli, NPR News, New York.
MONTAGNE: To read more about the Fed's decision, plus its impact on consumers, go to npr.org. Transcript provided by NPR, Copyright NPR.
