Fed's Future Focus Fraught With Frailties

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The Federal Open Market Committee, the panel that sets nationwide interest rate policy, agreed to leave interest rates unchanged this week, but indicated it is keeping a close watch on the threat of inflation.

Analysts didn't really expect the Fed to touch the federal funds rate (6.5 percent) based on the current economy, but many were surprised at the talk about potential inflation. Many financial analysts think inflation is easing.

The federal funds rate is the interest rate at which banks transfer money overnight, and the current rate is the highest it is has been in nine years.

The effect was felt on the financial marketplace, where traders saw an immediate downturn after the announcement.

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