WASHINGTON - The US Federal Reserve held benchmark interest rates steady today and said it remained concerned on inflation, but it downgraded its assessment of current economic conditions and left its future policy options open.
The widely expected decision by the central bank's Federal Open Market Committee keepsthe overnight federal funds rate target at 5.25 per cent, the level it hit in June after 17 straight quarter-percentage point increases.
In a statement outlining its decision, the Fed dropped a reference that had been contained in its last policy announcement to the possibility of further "firming" of monetary policy, saying simply: "Further policy adjustments will depend on the evolution of the outlook."
In addition, the central bank offered a nod to recent signs suggesting the economy is moving ahead only slowly.
"Recent indicators have been mixed and the adjustment in the housing sector is ongoing," the Fed said. "Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters."
Prices for US stocks and government bonds rose, while the dollar fell, as traders in financial markets saw the Fed's shifts in language opening the door to possible rate cuts later in the year.
Still, the Fed said it had not put away its inflation concerns. "The committee's predominant policy concern remains the risk that inflation will fail to moderate as expected," it said.
