The Federal Open Market Committee meeting today yielded no change in the federal funds rate, which the panel held at 2%, and offered no bias, citing upside risks to inflation and downside risks to growth.

“Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports,” the FOMC statement said. “However, labor markets have softened further and financial markets remain under considerable stress. Tight credit conditions, the ongoing housing contraction, and elevated energy prices are likely to weigh on economic growth over the next few quarters. Over time, the substantial easing of monetary policy, combined with ongoing measures to foster market liquidity, should help to promote moderate economic growth.

“Inflation has been high, spurred by the earlier increases in the prices of energy and some other commodities, and some indicators of inflation expectations have been elevated. The committee expects inflation to moderate later this year and next year, but the inflation outlook remains highly uncertain,” the statement continued.

“Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee. The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.

The only vote against the action was cast by Federal Reserve Bank of Dallas president Richard W. Fisher, who preferred an increase in the target rate.

The Fed earlier announced that Elizabeth A. Duke was sworn in as a Federal Reserve governor and would participate in the meeting. Duke was nominated and confirmed to fill the seat vacated by the resignation of Susan Schmidt Bies on March 30, 2007. The term expires Jan. 31, 2012.

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