Fed Leaves Rates Unchanged at 5.25%
Fed Leaves Rates Unchanged at 5.25%
WASHINGTON (Reuters) - The U.S. Federal Reserve on Tuesday halted a more than two-year string of interest-rate rises, holding its benchmark rate steady while it gauges whether a slowing economy will keep inflation in check.
If not, the Fed indicated it will resume raising rates.
The central bank’s policy-setting Federal Open Market Committee voted 9-1 to keep the federal funds rate target at 5.25 percent, pausing a cycle that had taken the rate steadily higher in 17 successive hikes since mid-2004.
Richmond Fed Bank President Jeffrey Lacker dissented, preferring a quarter percentage point increase but the Fed provided no reason why Lacker voted as he did.
Stocks weakened as investors saw the Fed action confirming a weakening economy. The Dow Jones industrial average <.DJI> lost 45.79 points to end at 11,173.59 while the high tech-laden Nasdaq Composite Index <.IXIC> dropped 11.65 to 2,060.85.
Prices for debt securities moved only modestly, since the Fed decision was anticipated, and were mixed. The 30-year U.S. Treasury bond shed 8/32 in price and yielded 5.02 percent while the bellwether 10-year Treasury note was unchanged.
Recent economic indicators have pointed to a downshift in the economy, led by a cooling housing market, but wages and prices continue to rise, and the Fed made clear its optimism about inflation was wary and conditional.
“Inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand,” the Fed said in a statement after the meeting