Fed Holds Rate at 2%

"They're trying to send a message, rightly or wrongly, that they're here to protect against systemic risk. They're not here to ensure survival," says Doug Roberts, chief investment strategist for Channel Capital Research. "They want to make a clear differentiation between protection against systemic risk and corporate risk. The story isn't over yet."

Ian Shepherdson, chief economist with High Frequency Economics, says that the Fed should win a gold medal for understatement when it comes to acknowledging the recent events that have unfolded on Wall Street by failing to speak about maintaining market confidence or financial stability.

"In our view this statement is either very brave or very reckless," Shepherdson says via email. "Not to acknowledge the catastrophes of the next few days runs the very serious risk that the Fed will be seen as Nero, fiddling while Wall Street burns. The gamble is that the chaos will subside in due course, AIG will survive and Fed inaction will be seen to be the right decision."

Between September and April, the Fed lowered its target by 325 basis points to ease the cost of lending and promote economic growth; it has held rates steady at 2% since then. The rate target directly affects short-term loans between banks, but it has a trickle-down effect on other consumer loans and thus affects prices and demand in the struggling housing market.

Earlier Tuesday, the Fed said it had injected a large amount of liquidity into the financial market. The Federal Reserve Bank of New York delivered $50 billion to money markets via overnight repurchasing agreements, or repos, and that it "stands ready to arrange further operations later in the day, as needed."