FED WON'T RAISE RATES, KEEPS POLICY DIRECTIVE AT NEUTRAL.

Byline: Martin Crutsinger Associated Press 

The Federal Reserve left interest rates unchanged Tuesday even as it voiced concerns about inflation, saying a more pressing problem is making sure the financial system gets through the Year 2000 date change without serious mishap.

While economists warned that the central bank clearly left the door open for future rate hikes in coming months, the stock market surged on the Fed's decision to bypass a fourth rate increase this year.

The Federal Open Market Committee, composed of Fed board members and regional bank presidents, concluded its closed-door deliberations with a brief announcement saying that ``in light of market uncertainties associated with the century date change'' it was important to focus policy on ``ensuring a smooth transition into the Year 2000.''

The Fed said it was keeping its policy directive, intended to signal future rate moves, at neutral. But economists said the wording of the statement left little doubt that the central bank was declaring only a temporary cease-fire in its campaign to battle inflationary pressures with higher interest rates.