Saying that "economic activity is leveling out," the Federal Reserve just announced that — as expected — it is not adjusting its "target range" for short-term interest rates.

That means it's leaving the target for the federal funds rate at "0 to 1/4 percent."

Looking for clues to how Fed policymakers think the economy is doing? Here's what they write:

Conditions in financial markets have improved further in recent weeks. Household spending has continued to show signs of stabilizing but remains constrained by ongoing job losses, sluggish income growth, lower housing wealth, and tight credit. Businesses are still cutting back on fixed investment and staffing but are making progress in bringing inventory stocks into better alignment with sales. Although economic activity is likely to remain weak for a time, the Committee continues to anticipate that policy actions to stabilize financial markets and institutions, fiscal and monetary stimulus, and market forces will contribute to a gradual resumption of sustainable economic growth in a context of price stability.

We added the bold. Translation: The Fed thinks the economy is getting better and will continue to slowly improve, while inflation should remain in check.

For what it's worth, the stock market is rallying at this moment.