Unsurprisingly, the

Federal Reserve

voted today to leave the federal funds lending rate unchanged at 4.75% and the discount rate unchanged at 4.50%. The

Federal Open Market Committee

on Feb. 2 will convene its first meeting of 1999 to again decide whether to change short-term rates.

Not one of the 31 primary dealers was expecting action, according to


. The Fed apparently viewed its three rate cuts between September and November as enough to bolster the flagging credit markets and inject stability into the financial system.

The Fed virtually telegraphed this inaction with its statement following the Nov. 17 Fed meeting, when it cut rates for the third time in seven weeks. "With the 75-basis-point decline in the federal funds rate since September, financial conditions can reasonably be expected to be consistent with fostering sustained economic expansion while keeping inflationary pressures subdued," the statement said.

Many economists we spoke to believe the Fed will cut rates at least once more, in early 1999. The inflationary conditions in the market certainly afford the Fed this opportunity.

The fed funds rate is the overnight interbank lending rate. The discount rate is the rate for loans from the Fed to banks.