The Federal Open Market Committee kept the fed funds rate target rate at 5 1/4 . Lots of the standard boilerplate comments made it into the short press statement that they put out after the meeting:

• Reference to inflation concerns:  check
• Reference to housing market concerns: check
• Reference to economic expansion: check

Notably absent: any reference to the ongoing meltdown in the sub-prime market.  Perhaps they're simply trying to avoid throwing more gasoline on the fire, but the non-cynical view is that the sages at the Fed just see this as more noise in the data. 

For now investors should still be concerned that the fall-out of the sub-prime train wreck might hit the low end of the market as liquidity dries up and pulls buyers out of the market...but...

...it remains possible that this shake-up just weeds out a few of the more aggressive of the sub-prime lenders - bad apples with flawed business models.  Like a forrest after a fire the system as a whole will be healthier after the purge, and  the surviving companies will hop in to pick up the slack.  To be determined...