Unch.

The Fed kept its key interest rate and policy focus unchanged. The reaction on Wall Street and among Fed analysts was varied.

Key quotes from the Fed statement:

"financial markets have been volatile in recent weeks, credit conditions have become tighter for some households and businesses, and the housing correction is ongoing."

Although the downside risks to growth have increased somewhat, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

On Fed policy:

“I think this means that the Fed isn’t preparing the market for a rate cut anytime soon,” said Tom Gallagher, a Fed analyst with the ISI Group in Washington, a financial research firm. “On the other hand, they set up a statement that they could use to justify a rate cut if things deteriorate faster than they now expect.”

On Bernake:

“Ben Bernanke is more standoffish,” said Drew Matus, an economist with Lehman Brothers. “He’s the guy sitting there watching the kids in the playground. And if there’s a fight, he’s going to stay out of it unless somebody’s going to get hurt. Greenspan was more like a doting parent.”

Click here for the entire text of the statement by the Fed Committee..

Posted at August 8, 2007 01:09 PM

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