Fed Leaves Key Short-Term Rate at 5.25 Percent
Elaine Barr, Financial News Editor


WASHINGTON –- In a much expected move, the Federal Open Market Committee decided today to keep its target for the federal funds rate at 5.25 percent.

That makes the fifth consecutive meeting the Fed has left the rate unchanged.

[Editor's Note: Protect yourself from rising inflation. The Fed won`t do it for you!]

The widely expected decision keeps the overnight federal funds rate target at the level it was set last June after 17 straight quarter-percentage point increases.

Voting for the FOMC monetary policy action were: Ben Bernanke, chairman; Timothy Geithner, vice chairman; Susan Bies; Thomas Hoenig; Donald Kohn; Randall Kroszner; Cathy Minehan; Frederic Mishkin; Michael Moskow; William Poole; and Kevin Warsh.

Despite the agency's decision to keep the rate unchanged, the Fed indicated it continues to focus on inflation risks.

In a release, the Fed stated that, "Recent indicators have suggested somewhat firmer economic growth and some tentative signs of stabilization have appeared in the housing market. Overall the economy seems likely to expand at a moderate pace over coming quarters.

"Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time. However, the high level of resource utilization has the potential to sustain inflation pressures," the release continued.

It further stated that, "The Committee judges that some inflation risks remain. The extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

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