Federal Reserve leaves rates at 2 percent

WASHINGTON, Aug. 5 (UPI) -- The U.S. Federal Reserve Open Market Committee said Tuesday it would maintain its target for the federal funds interest rate at 2 percent.

"Economic activity expanded in the second quarter, partly reflecting growth in consumer spending and exports," the central bank's statement said. "However, labor markets have softened further and financial markets remain under considerable stress."

The statement cited "tight credit conditions, the ongoing housing contraction and elevated energy prices," as "likely to weigh on economic growth over the next few quarters."

Many expected the bank to leave rates unchanged but were looking for signals of which move the bank might make in the future.

One clue may be the voting record. In Tuesday's vote, 10 committee members voted to keep the vote unchanged, while Richard Fisher, president of the Federal Reserve Bank of Dallas, voted against.

Fisher "preferred an increase" the statement said.

"Although downside risks to growth remain, the upside risks to inflation are also of significant concern to the committee," the statement said, signaling, perhaps, an increase may be the next move.