The Federal Open Market Committee took the advice Wednesday of all the financial analysts and market watchers and did absolutely nothing with the short term Federal Funds Rate (FFR).

After whittling away at the rate over time from a high of 5.25 percent back in August 2007 down to 2 percent last month, the Fed has decided to go back to the wait-and-see stance Chairman Ben Bernanke established when he first took over the reins of the agency back in August 2006. At that time former Fed Chairman Alan Greenspan had just finished adjusting the rate upward 17 consecutive times.

Of the 10 Committee members, the only dissenting vote was from Richard W. Fisher, president and CEO of the Federal Reserve Bank of Dallas, who preferred that the Committee not wait and raise the FFR at this meeting.

This move by the Fed is recognition of the fact that further increases in oil prices threaten the economy by pushing up prices in goods and services, according to the New York Times.

Oil, other commodities and food prices are a chief concern to the Fed Committee at this time as the expectation of continued inflation could change their entire way of thinking, possibly even convincing them to start raising rates sooner than later in reaction to those concerns.

Still, the official FOMC statement says the Committee “expects inflation to moderate later this year and next year.” The problem is, that’s what they’ve been saying all along even as they were cutting the FFR back.

The ongoing housing contraction, along with stressed financial markets and soft labor markets are key concerns for the Fed, as are tight credit conditions and rising energy costs. All told, the Fed says these “are likely to weigh on economic growth over the next few quarters.”

Reading between the lines, it appears the Fed does not have a definite grasp on which way the economy is headed at this time so it has decided to hedge its bet until further data comes in.

What’s your take on the Fed’s latest move? ForeclosurePulse would love to have your comments.