As expected, the Federal Open Market Committee today kept interest rates unchanged when it left the federal funds rate at 2%.

In a statement, the Fed said economic activity grew in the second quarter thanks to consumer spending and exports. But it also cited strained financial and labor markets, and said that the combination of tight credit, weak housing and high energy prices will pressure economic growth over the next few quarters. The Fed also said the inflation outlook is uncertain, although it expects it to moderate later this year and into 2009.

The lone dissenter on the decision to hold rates steady was Richard Fisher, president of the Dallas Fed, who wanted to increase the federal funds rate.

On Wall Street, the news elevated an already up day for the markets with the Dow closing higher by 331 points, while the Nasdaq jumped 64 points and the S&P 500 gained nearly 36 points.