The Federal Reserve continues to steer a course through an economic landscape with faltering housing and mortgage markets on one side and low unemployment and stubbornly rising prices on the other side.

The Fed left short-term interest rates alone in the regularly scheduled meeting of the Federal Open Market Committee. The federal funds rate remains 5.25 percent, and the prime rate remains 8.25 percent. The committee has left short-term rates alone since June, after it had raised rates a quarter-point at a time in 17 meetings over two years.

Investors and economists had expected the decision not to change rates, and they anxiously awaited the Fed's rate policy statement for its assessment of the economy. They mainly were watching for any hint that the Fed was becoming less hawkish about inflation. The answer: No, the Fed hasn't changed its stance. It is still more worried about inflation than anything else, even with problems in the housing sector and the broader economy.

"Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing," the Fed's statement said. "Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters.

"Core inflation remains somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

"In these circumstances, the Committee's predominant policy concern remains the risk that inflation will fail to moderate as expected."

Some kinds of consumer loans, such as those for variable-rate credit cards and home equity lines of credit, have interest rates that move up and down with the prime rate. They will largely remain unchanged.

The Fed's decision, and the explanation for it, will exert more of an effect on long-term rates, especially for mortgages. Rates on fixed-rate mortgages, auto loans and home equity loans move up and down in response to market forces. And the Fed's explanations tend to affect the market.

Falling home sales and prices have been on the Fed's radar for a few months now. "There's a conflicting problem with any rate change," Anthony Sanders, professor of finance and real estate at Arizona State University, said before the Fed's announcement. "If they lower rates, what they're worried about is increasing inflation. But lowering rates could also cause a surge in housing demand because of cheaper refinancings." So lower rates would bring good news and bad news.

But if the Fed raised rates, "that could be bad as well, because we have all these adjustable-rate mortgages (ARMs) that are set to reset this year and next year," Sanders adds. A Fed rate hike would cause ARM rates to spike higher, and would cause "a real slowdown in refinancings and cash-out" refinancings. That would slow the economy by taking spending money out of people's pockets, and probably would harm stock prices, too.

From a housing and mortgage viewpoint, Sanders says, "I think hanging tight on the rate right now was the wise decision."

Bob Walters, chief economist for Quicken Loans, agrees that the Fed is steering the right course. "They know there's pain in the housing market, but they don't see any kind of panic or a collapse," Walters says. "They see a lot of unwinding of the speculation that was happening over the last couple of years, and they don't want to help those speculators out."

A rate cut would help the speculators because a lot of them got ARMs, expecting to flip the houses profitably before the ARMs reset. A lot of house speculators got burned, though, when they discovered that they couldn't sell their investment properties without taking big losses, and they were forced to hold onto the houses even as their ARMs reset and they had to make bigger payments.

The Fed's rate-setting Open Market Committee meets eight times a year. The last time the panel met, March 21, it observed that "adjustment in the housing sector is ongoing" while worrying that "readings on core inflation have been somewhat elevated." Then, as now, those balancing concerns convinced the central bank to leave rates alone.

The Fed controls the federal funds rate indirectly, by selling and buying securities to add and subtract cash from the banking system. The prime rate is 3 percentage points higher, and moves up and down with the federal funds rate.