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US rates on hold for third month US rates on hold for third month
(40 minutes later)
Policymakers have kept US interest rates on hold at 5.25% for the third consecutive month but remain wary of inflationary risks to the economy.Policymakers have kept US interest rates on hold at 5.25% for the third consecutive month but remain wary of inflationary risks to the economy.
The widely expected decision means that rates have been on hold since August, after 18 months of successive rises.The widely expected decision means that rates have been on hold since August, after 18 months of successive rises.
Consumer prices fell sharply last month but inflation pressures are still a concern since excluding volatile energy movements, prices remain fairly strong.Consumer prices fell sharply last month but inflation pressures are still a concern since excluding volatile energy movements, prices remain fairly strong.
Experts remain divided over the long-term direction of rates. US stock markets rose as analysts said another rate rise soon was unlikely.
'Moderate growth''Moderate growth'
Some forecast another rise in rates before the end of the year while others expect the next movement to be a downward one. "The Fed's telling us that they are still watching the inflation picture," said David Resler, chief US economist at investment bank Nomura.
"They are not letting their guard down but there's no reason for action now," he added.
Economic growth has slowed over the course of the year Federal Reserve statementEconomic growth has slowed over the course of the year Federal Reserve statement
The Fed said inflation still posed a threat to economic stability but added that it believed price pressures were likely to lessen over time, reflecting the fall in world oil prices.The Fed said inflation still posed a threat to economic stability but added that it believed price pressures were likely to lessen over time, reflecting the fall in world oil prices.
"Economic growth has slowed over the course of the year," the Fed said in a statement."Economic growth has slowed over the course of the year," the Fed said in a statement.
"Going forward, the economy seems likely to expand at a moderate pace.""Going forward, the economy seems likely to expand at a moderate pace."
Wednesday's rate decision was the last before next month's mid-term Congressional elections.Wednesday's rate decision was the last before next month's mid-term Congressional elections.
Any rate change would have been politically significant as it would have affected borrowing levels and made a clear statement about the health of the economy.Any rate change would have been politically significant as it would have affected borrowing levels and made a clear statement about the health of the economy.
Watching gameWatching game
Signs that price pressures are easing and strong evidence that the economy has slowed since the start of the year have persuaded the Fed to adopt a 'watch and wait' policy on rates for the time being.Signs that price pressures are easing and strong evidence that the economy has slowed since the start of the year have persuaded the Fed to adopt a 'watch and wait' policy on rates for the time being.
Output slipped noticeably in the second quarter and the once-buoyant housing market has cooled considerably.Output slipped noticeably in the second quarter and the once-buoyant housing market has cooled considerably.
Policymakers want to control inflation while ensuring the slowdown in economic activity does not worsen into a prolonged downturn.Policymakers want to control inflation while ensuring the slowdown in economic activity does not worsen into a prolonged downturn.
One member of the Fed's interest rate setting body opposed the decision, voting instead for a quarter point rise. One member of the Fed's 11-member interest rate setting body opposed the decision, voting instead for a quarter point rise.
Jeffrey Lacker also voted for an increase last month.Jeffrey Lacker also voted for an increase last month.