Fed Holds Rate at 2%

Updated from 2:17 p.m. EDT

The Federal Reserve held its key interest-rate target at 2% Tuesday, indicating that the central bank would rather continue its plan to fight inflation than provide much-needed liquidity to damaged credit markets.

The Federal Open Market Committee noted that strains in the financial markets have increased significantly and that labor markets have continued to weaken. Tight credit conditions, continued housing woes and some slowing in export growth should weigh on growth over the next few quarters. However, the FOMC 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. ...