Fed Holds Short-Term Interest Rate At 5.25%

With a single dissenting vote, the Federal Open Market Committee (FOMC) decided on September 20 to hold the federal funds target rate at 5.25%. Inflation pressures, the panel said, "seem likely to moderate over time."

The FOMC, however, will be keeping its eyes on U.S. inflation rates, particularly the so-called core rates, which exclude price changes for food and fuel. They have been running about a percentage point higher than the FOMC's comfort zone in recent months. "Some inflation risks remain," the Fed policy-making group stated, adding that it will continue to monitor economic data before deciding on "the extent and timing of any additional firming that may be necessary."

The FOMC's next scheduled get together is a two-day meeting on October 24 and 25.

The lone vote against holding the federal funds target rate at 5.25% came from Jeffrey M. Lacker, who wanted to increase the short-term interest rate target by a quarter-point to 5.5%.

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