By Martin Crutsinger
The Associated Press

WASHINGTON - The Federal Reserve left a key short-term interest rate at a 45-year low Wednesday but dropped a promise that it had been making since August to keep rates low "for a considerable period."

The wording change was enough to jolt financial markets, sending stock prices plunging, even though private economists said they thought that the Fed still planned to keep rates unchanged for most of this year.

The Dow Jones Industrial Average, which had been in positive territory before the Fed's afternoon announcement, lost 141.55 points, closing at 10,468.37. The Nasdaq Composite Index lost 38.67 to 2077.37.

Bond prices dropped as well, sending interest rates set by the market sharply higher.

Short-term rates tied to Fed actions did not move at all because the Fed left its target for the federal funds rate, the interest that banks charge on overnight loans, unchanged at 1 percent, where it has been since last June. That means commercial banks' prime rate, the benchmark rate for millions of consumer and business loans, remains unchanged at 4 percent, the lowest rate since 1959.

The adverse market reaction occurred because the Fed dropped the phrase that it had included in its last four policy statements - that it believed low inflation and slack use of resources gave it the leeway to keep rates low "for a considerable period."

Instead, the central bank, still citing the low inflation and slack resource use, said it thought "it can be patient" in deciding to raise interest rates.

While the wording change was subtle, Wall Street worried that by dropping the phrase "for a considerable period," the central bank is getting closer to beginning a series of rate increase to make sure the rebounding economy does not trigger inflation.

Still, private economists said the statement as a whole does not indicate the central bank is edging closer to a rate boost.

"The Fed is getting the market ready for tighter monetary policy eventually, but they are not going to raise interest rates any time soon," said Sung Won Sohn, chief economist at Wells Fargo in Minneapolis.

Complicating the issue this year is the presidential election. The central bank usually tries to avoid changing rates too close to the November vote out of concern that it could be seen as trying to favor one party over the other.

The Fed last raised rates in June 2000, when it increased the federal funds rate by a half-point to 6.5 percent, the last in a series of six rate increases the central bank had begun in June 1999.

Those rate hikes did slow economic growth, but they also contributed to a bursting of the stock market bubble in early 2000. The fallout pushed the country into a recession in March 2001, ending a 10-year economic expansion, the longest in U.S. history.

The Fed started in January 2001 to cut interest rates in a series of moves.