Fed Ends Rate Hike Streak

The monetary policy-making committee of the Federal Reserve Board has left the target federal funds rate unchanged at 5.25%, opining that "inflation pressures seem likely to moderate over time."It was the first time in more than two years that the Federal Open Market Committee has met without raising its target for the key short-term rate, which banks charge on overnight loans. "Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices," the Fed panel said Aug. 8. Despite its comment on moderating inflation pressures, the FOMC said "some inflation risks remain," citing recent core inflation levels and the prices of energy and other commodities. Swiss Re U.S. chief economist Kurt Karl said the pause was understandable, but declared that "the Fed needs at least one more interest rate hike as an insurance policy against a rising inflation." The Fed can be found online at http://www.federalreserve.gov.