No change in rates, (no surprise), but the Fed indicates that the risk is “weighted towards weakness,” (a bit of a surprise).
It looks like this decision is due to the continued low rate of inflation. In addition, falling oil prices and a weak labor market should put additional downward pressure on prices. The greater risk would thus appear to be deflation, rather than an increase in the inflation rate.
FRB: Press Release — FOMC statement — May 6, 2003
Recent readings on production and employment, though mostly reflecting decisions made before the conclusion of hostilities, have proven disappointing. However, the ebbing of geopolitical tensions has rolled back oil prices, bolstered consumer confidence, and strengthened debt and equity markets. These developments, along with the accommodative stance of monetary policy and ongoing growth in productivity, should foster an improving economic climate over time.
Although the timing and extent of that improvement remain uncertain, the Committee perceives that over the next few quarters the upside and downside risks to the attainment of sustainable growth are roughly equal. In contrast, over the same period, the probability of an unwelcome substantial fall in inflation, though minor, exceeds that of a pickup in inflation from its already low level. The Committee believes that, taken together, the balance of risks to achieving its goals is weighted toward weakness over the foreseeable future.