Federal Reserve Holds Rates at 2%

Updated from 2:14 p.m. EDT

The Federal Reserve held its key interest-rate target steady Tuesday, indicating that the central bank's decision to support economic growth with a 2% target, rather than thwart inflation with rate hikes, has gone according to plan.

The Federal Open Market Committee noted that the job, credit and housing markets remain under stress and that high energy prices threaten to put pressure on future economic growth. However, it reiterated its position that the economy will stay afloat with the initiatives already put in place.

"Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth," the FOMC said in a statement.

While economic output remained positive in the second quarter -- with GDP growing a less-than-expected 1.9% -- that growth was driven in part by consumer spending that was boosted by federal tax rebates. Now that most of those checks have been spent, boosting economic activity in the latter half of the year may prove more challenging.

The market had largely expected the Fed's move -- or lack thereof -- having already sent the Dow Jones Industrial Average up more than 200 points early Tuesday as oil futures dropped below $118 per barrel and a report showed better-than-expected performance in the services sector.

"This should be seen as more of a nonevent -- really a continuation of what we've seen coming from the Fed for a while," says Jason Pride, director of research for Radnor, Pa.-based Haverford Investments.