Fed Holds Interest Rate at 5.25%

or the second time in as many meetings, the Federal Reserve decided on Wednesday to hold the benchmark U.S. interest rate at 5.25%.

The decision was not unanimous, with Federal Open Market Committee member Jeffrey Lacker voting for another quarter-point increase.

While some inflation risks remain, inflation pressures appear likely to moderate over time, the FOMC statement said.

Full Statement from the Federal Reserve

he moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.

eadings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have 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.

onetheless, 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.

oting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; 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.