Key short-term interest rate stays at 5.25%

Saying the economy is "likely to expand at a moderate pace," in the next few months, the Federal Reserve's Open Market Committee today voted to keep the short-term federal funds rate at 5.25 percent.

The rate has been unchanged since June, when the last of 17 consecutive 25-basis-point increases to the overnight rate was implemented.

Although many in the housing industry have hopes the Federal Reserve will lower the federal funds rate in 2007, the committee said some inflation risks remain. 

"Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time," the committee said in a statement. "However, the high level of resource utilization has the potential to sustain inflation pressures."

The vote to leave the target for the federal funds rate unchanged was unanimous. The committee, which meets eight times a year, is scheduled to meet next on March 20.

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