Updated from 2:19 p.m. EDT

In an environment in which the slightest slip of the tongue can be deadly (for bonds, at least),

Federal Reserve

policymakers voted unanimously Tuesday to leave interest rates unchanged and said the risk of disinflation still outweighs that of inflation.

The central bank noted "spending is firming," but also said it remains concerned about the labor market and that pricing power remains "muted," with the threat of disinflation outweighing that of inflation.

In its risk statement the Federal Open Market Committee noted that "upside and downside risks to the attainment of sustainable growth for the next few quarters are roughly equal" -- the same thing it said at its last meeting June 25. The panel also said the risk of a "fall in inflation exceeds that of a rise in inflation from its low level," and that that concern would have the upper hand for the near future.

The statement added: "The Committee believes that policy accommodation can be maintained for a considerable period."

Although that was supposed to sound like music to the bond market's ears, the benchmark 10-year note fell slightly after the announcement, with the yield rising to 4.36%. Stocks initially gained, with the

Dow Jones Industrial Average

recently up 23 points to 9241 and the

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Nasdaq

adding 11 points to 1672.

That statement echoed Alan Greenspan's promise to Congress last month that the Fed won't raise interest rates "for as long as it takes to achieve a return to satisfactory economic performance." The committee is hoping not to confuse market players further, after it provoked bond-price swings in June on mixed interpretations of the central bank's intentions.

"We have to assume we're on auto pilot for a long time," said Joel Naroff, chief economist at Naroff Economic Advisors. "They clearly don't fear inflation, and, for now, markets will understand this as a sign additional increases in rates are not supported by economic fundamentals."

In a slight change in wording, the Fed said labor market indicators are mixed, while "business pricing power and consumer prices remain muted." In its previous statement, it had noted "marked improvement in financial conditions, and stabilization in labor and product markets."

Concerns with slowing inflation resonated earlier fears the low-inflation trend could pose a risk to an upturn in activity. Recently, Fed governor Ben Bernanke said that even strong economic growth may not be enough to avoid disinflation.

The statement also said "an accommodative stance of monetary policy, coupled with still-robust underlying growth in productivity, is providing important ongoing support to economic activity."

The Labor Department reported U.S. productivity soared by 5.7% in the second quarter, from a 2.1% rate in the first quarter, which, to many, raised the prospect of economic expansion without job creation.

U.S. gross domestic product grew by a 2.4% annualized rate in the second quarter, ahead of an average forecast of 1.5%. And most economists expect growth to accelerate in the second half and in 2004 as tax cuts boost spending.

"They didn't give us a balance of risk on the growth side, but if they had, my interpretation is they would've said they expect the economy to grow," said Naroff.