Fed Leaves Rates Unchanged

Updated from 2:23 p.m. EDT

As expected, the Federal Reserve's policy-making arm, the Federal Open Market Committee, left its fed funds rates unchanged at 1.75% and maintained its neutral bias, saying that the risks of weakness in the economy are balanced with the risks of price inflation.

But the statement accompanying its decision was slightly more upbeat about the second half of this year, economists said. In that statement, the Federal Reserve said that both the upward impetus from the swing in inventory investment and the growth in final demand appear to have moderated, but that it expects final demand to pick up over coming quarters.

"I wouldn't describe it as more cautious. It's the first time I've seen this confidence that the committee expects economy to pick up in coming quarters. They hadn't told us they expected pick up in final demand this way," said Anthony Karydakis, senior financial economist at Banc One Capital Markets. ...