Fed Holds Interest Rate at 5.25% for Fourth Straight Time

Click here for the full statement from the Federal Reserve.

or the fourth time in a row, the Federal Reserve on Tuesday kept the benchmark U.S. interest rate at 5.25%.

Economic growth seems to have cooled this year, led by “a substantial cooling of the housing market,” the Federal Open Market Committee said in a statement.

The decision was not unanimous, with FOMC member Jeffrey Lacker voting for another quarter-point increase, as he had at the last Fed meeting in October.

While some inflation risks remain, inflation pressures appear likely to moderate over time, the FOMC statement said, which was similar to its statement following its previous meeting.

Before the current cycle, the Fed had boosted interest rates by a quarter-point in 17 straight meetings, with the last being in June. (Click here for previous coverage.)

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Full Statement from the Federal Reserve

The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5.25%.

Economic growth has slowed over the course of the year, partly reflecting a substantial cooling of the housing market. Although recent indicators have been mixed, the economy seems likely to expand at a moderate pace on balance over coming quarters.

Readings on core inflation have been elevated, and the high level of resource utilization has the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.

Nonetheless, 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.

Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; William Poole; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.