The U.S. Federal Reserve (Fed) on Tuesday left a key interest rate unchanged, holding it steady while it measures whether a slowing economy will keep inflation contained. The central bank's policy-setting Federal Open Market Committee voted 9 to 1 to keep the rate at 5.25 percent, pausing a cycle that had taken the rate steadily higher in 17 consecutive increases since mid-2004. Recent economic indicators have suggested a slowing in the economy, led by a cooling housing market, but wages and prices continue to rise, and the Fed said it could resume raising borrowing costs if inflation continues. “Inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining … demand,” the Fed said in a closely-watched statement issued after the meeting. “Nonetheless, the committee judges that some inflation risks remain,” the central bank added, saying any further rate moves would depend on the outlook for inflation and growth. For the first time since Ben Bernanke took over as Fed chairman in February, the Fed decision was not unanimous. Fed board member Jeffrey Lacker dissented, saying he would have preferred an 18th consecutive quarter-point rate increase. Many analysts believe the pause in rate rises will be short-lived as central bank policy-makers confront continued inflation pressures triggered by soaring energy prices and new data that wage pressures are intensifying.
