FED RATE DECISION

WASHINGTON (AP) -- The Federal Reserve left a key interest rate unchanged on Wednesday as falling energy prices helped to restrain inflation pressures.
Federal Reserve Chairman Ben Bernanke and his colleagues issued a brief announcement saying they would leave the federal funds rate, the interest that banks charge each other, at 5.25 percent.

The decision represents a break for borrowers. It means that banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain at 8.25 percent.
The Fed also had left rates unchanged at their last meeting in August, breaking a record string of 17 rates hikes that had driven the funds rate to its highest level in more than five years.
The decision to leave rates alone for a second time had been widely expected in financial markets, given recent favorable developments on inflation. Oil prices have fallen by more than 20 percent over the past two months and a cooling housing market has contributed to a slowdown in overall growth.
The Fed is trying to engineer a soft-landing for the economy in which growth is slowed enough to keep inflation from getting out of hand without overdoing the credit tightening and raising the chances of a recession.
In its statement, the Fed continued to signal concerns about inflation, repeating a phrase it had used last time -- that the Fed's rate setting panel "judges that some inflation risks remain."
The Fed also said -- as it had last time -- that "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."
The Fed took note of the slowdown that has occurred in the economy, saying that "economic growth has moderated from its quite strong pace earlier this year" which it attributed to the cooling housing market and the impact of previous Fed rate hikes and higher energy prices.
The funds rate was at a 46-year low of 1 percent and the prime rate stood at 4 percent back in June 2004 when the Fed began a two-year credit campaign to raise rates. The Fed boosted rates a record 17 consecutive times before deciding to pause at the last meeting on Aug. 8.
The decision to keep rates unchanged Wednesday was supported by a 10-1 vote with Jeffrey Lacker, president of the Fed's Richmond regional bank, again casting the lone no vote. Lacker, who also dissented in August, argued again that another quarter-point rate hike was needed to keep inflation in check.