The Fed reported a slower economic expansion into the forseeable future due to the slow pace the housing market has set, among other key factors. Inflation risks are still moderate to high so the Fed is leary of dropping rates to stimulate the economy. The current housing situation has a great deal to do with the economic well being of the next couple of years.
Bernanke said, "the economy has emerged from its anemic spell, but overall growth for the year will be lower than expected. Inflation remains the chief concern...the economy appears likely to expand “at a moderate pace” over the second half."
Some are reporting (hoping) for a turn in the housing trends in 2008. The economy will follow suit over time and rebound some. Federal interest rates will remain unchanged as they have for nearly a year at 5.25 percent.