Today the Federal Reserve announced that it would keep interest rates at the current 0-0.25% level. The all important monetary policy statement included some very slight changes in wording, but it was mostly the same as before. The small changes included a bit of an upgrade in their comments on the current state of the economy. The FOMC now says that economic activity is indeed improving and the labor markets are picking up. They included a note about household spending improving, albeit at a slow pace because of constraints on the consumer.

One of the big questions before today was whether or not the FOMC would keep the line about expecting interest rates to stay low for an extending period of time. In fact, they did keep that particularly wording just the same as it has been. Clearly, the Federal Reserve believes things are getting better, but they are being very cautious making any kind of move toward higher interest rates. The situation in Greece has also served to keep the world on notice that the credit crisis isn’t completely over in the global economy.

The next move for the Federal Reserve has to be up since interest rates can’t go any lower. The million dollar question is, when will that move to higher interest rates take place? While Wall Street often trembles at the talk of any raise in interest rates, at some point rates will need to move slowly higher. At first it may cause investors to grow concerned, but in the long run interest rates need to move to a more normalized level. For the many consumers who use money markets and certificates of deposit to increase their savings, a move to slightly higher rates would be a very welcome site.

Interest rates are staying the same for now and they probably will for a while, but next time you hear rates may be moving higher don’t immediately think that will ruin the economy.