The Federal Reserve on Wednesday left historically low interest rates alone but signaled a mild concern for rising inflation, specifically citing a rise in the cost of energy and other commodities.

Fed Chairman Ben Bernanke and his colleagues said economic data released since their last meeting in April has shown that the economy may not be improving significantly, but it’s not getting any worse either.

The "pace of economic contraction is slowing," the Fed stated.

The Federal Open Market Committee said it will maintain the Fed’s strategy of low interest rates and massive liquidity programs aimed at increasing bank lending and consumer borrowing.

Market analysts said there was little if anything unexpected in the Fed’s announcement.

The Fed held its key bank lending rate at a record low between zero and 0.25%. That means commercial banks’ prime lending rate, used to peg rates on home equity loans, certain credit cards and other consumer loans, will stay around 3.25%, the lowest in decades.

Interest rates are likely to stay low for the foreseeable future, according to a statement released by the FOMC.

The committee members “anticipate that economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period,” the statement reads.

 “In recent days and weeks, the Fed has taken great pains to convey to the market that rates are not going higher any time soon.  Perhaps this phrase’s inclusion yet again will get that message across,” said Dan Greenhaus, of Miller + Tabak’s Equity Strategy Group.

The FOMC cited several reasons for maintaining the status quo: financial markets have “generally improved” in recent months, and household spending has shown signs of stabilizing while remaining fragile due to ongoing layoffs, declining home values, and tight credit markets.

In addition, businesses are still struggling, “but appear to be making progress in bringing inventory stocks into better alignment with sales,” the FOMC stated.

Still, “economic activity is likely to remain weak for a time,” according to the statement.

Meanwhile, fears have grown on Wall Street that the Fed’s radical efforts to lift the country out of the longest recession since World War II could ignite inflation later on and the Fed seems to have heard those concerns.

The Fed acknowledged those fears, but predicted inflation “will remain subdued for some time” because the global economic slowdown will tamp down demand for goods and in turn keep prices low.

Finally, the Fed announced no plans to alter its unprecedented efforts to pump liquidity into global credit markets, saying instead it will continue to monitor the programs.

“The Committee will continue to evaluate the timing and overall amounts of its purchases of securities in light of the evolving economic outlook and conditions in financial markets,” the statement read.

In March, the Fed launched a bold $1.2 trillion effort to drive down interest rates to try to revive lending and get Americans to spend more freely again. It said it would spend up to $300 billion to buy long-term government bonds over six months and boost its purchases of mortgage securities. So far, the Fed has bought about $177.5 billion in Treasury bonds.

The Fed is on track to buy up to $1.25 trillion worth of securities issued by Fannie Mae and Freddie Mac by the end of this year or early next year. Nearly $456 billion worth of those securities have been purchased.

A fresh sign of the economy’s improvement emerged Wednesday. Orders placed with factories for costly goods grew 1.8% for the second straight month in May, and a barometer of business investment posted its largest gain in nearly five years, the Commerce Department reported.

Another government report showed that new-home sales dipped slightly in May, a sign the housing market’s recovery will be gradual. Sales of previously owned homes nudged up in May, according to a report Tuesday from the National Association of Realtors.

Bernanke has predicted the recession will end later this year.

Some analysts say the economy will start growing again as soon as the July-September quarter as the Fed’s actions so far, along with the federal stimulus of tax cuts and increased government spending, take hold.