With signs emerging that U.S. economic growth finally is slowing down, the Federal Reserve left short-term interest rates on hold Wednesday.

The Fed's monetary policy panel - the Federal Open Market Committee - con-cluded a two-day private meeting, signaling it had left the benchmark rate on overnight loans between banks unchanged at 5.5 percent. It's been at that level since a quarter of a percentage point increase in March 1997.The decision was widely anticipated and financial markets showed little reaction. Raising U.S. rates would have risked destabilizing already-rocky Asian financial markets by giving investors another reason to transfer their money to the United States.

Plus, the American economy appears to be slowing on its own from growth rates that could generate inflation pressures if they persisted. And consumer price inflation, running at a 1.5 percent annual rate during the first five months of the year, appears well-contained.

"The need to tighten (interest rates) isn't that pronounced," said economist Bob Dederick of Northern Trust Co. in Chicago. "There is some evidence that inflation has passed its best, but no evidence it's become anything remotely fearsome. ... Meanwhile, you have a public and a stock market that would be saying, `Why are you doing this to me?' "

On Wall Street, reports the Japanese government will propose major tax cuts boosted stock prices. In early afternoon the Dow Jones industrial average was up 55 points, hovering about the 9000 mark.

In New York, the National Association of Purchasing Management said today the nation's manufacturing activity fell in June for the first time in nearly two years, hurt by Asia's economic troubles.

Also, the Conference Board, a business research group, said its Index of Leading Indicators was unchanged in May for the second consecutive month, signaling slower but still positive growth for the rest of the year.