Oil stuck above $110 a barrel? Grain prices setting records? Iron ore doubling overnight? Never mind. The Federal Reserve held a key interest rate unchanged today and signaled that a tepid economy would likely keep board members from hiking rates anytime soon.

The collapsing housing market and tight lending conditions in financial markets have been drags on growth for more than a year now, but alarmingly steep gains in oil prices had begun to shift some Fed members' concern to inflation.

As energy prices ebbed over the last two weeks—it fell below $120 a barrel today in New York—the Fed has been forced back on the fence between inflation and growth.

It's not a particularly comfortable position. Evidence is growing that the credit crunch is hitting consumers harder. Credit card companies say that the number of people unable to make their payments is on the rise.

Still, the Fed's decision to keep its federal funds rate steady at 2 percent sparked a celebration on Wall Street. Traders bid up stocks frantically, launching the Dow Jones Industrial average on a 331-point gain. It closed at 11,615, up 2.94 percent. The broader Standard and Poor's 500 index also gained almost 3 percent, as did the tech-heavy Nasdaq Composite Index.

Traders' enthusiasm was encouraged by the Federal Open Market Committee members' statement, which said that the committee's "substantial easing of monetary policy"—it has cut the rate by 3.25 percentage points since September—should help promote growth.

While the Fed also said that inflation was of "significant concern," it dropped language from its previous statement, in June, which said that risks to economic growth had been lowered.

Voting against the other members for the fifth time this year was Dallas Federal Reserve Bank President Richard Fisher who wanted to raise rates. He's unlikely to get his way soon, judging by the markets. Interest rate futures lowered their expectations of a Fed interest rate hike before 2009—coincidentally after the presidential election.

"In the short-term, it's hard to envision this scenario (of a rate hike)," Joe Davis, chief economist at Vanguard, told Reuters. "For that to happen, you would need to see things improving significantly."

The Fed started the current cycle of cutting rates last September, when it dropped them a larger-than-expected 50 basis points, or half a percentage point, in response to the credit crunch.

Including that cut, the bank has lowered its federal funds target rate by 3.25 percentage points. The Fed has kept its benchmark rate unchanged at 2 percent since April as rising energy prices have ignited concerns over mounting inflation.

In the weeks leading up to today's meeting, those concerns led two regional Federal Reserve bank presidents called for tighter monetary policy—higher rates—to be enacted sooner rather than later.

But with economic growth tepid and banks still hesitant to extend credit, most analysts don't believe the Fed will be in a position to raise rates until 2009. In fact, on the first anniversary of the credit crunch last week, the Fed signaled it was still concerned about liquidity when it added new borrowing facilities for banks.

Meanwhile, policymakers are expected to get some support from falling oil prices, which will help check inflation in the coming months.

Before today's meeting, the Fed swore in new voting board member Elizabeth Duke who will fill one of three empty seats on the F.O.M.C.