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Fed Leaves Rates Unchanged; Says Inflation Likely To Ease

Facing mounting evidence that the U.S. economy has cooled, the Federal Reserve decided Wednesday to leave interest rates unchanged, as was widely expected.

Facing mounting evidence that the U.S. economy has cooled, the Federal Reserve decided Wednesday to leave interest rates unchanged, as was widely expected.

In leaving its target for the federal funds rate at 5.25 percent, the Fed noted the slowdown in the housing market, and its belief that inflaion pressures are likely to ease in coming months.

"Readings on core inflation have been elevated, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures," the Fed said in its statement. "However, inflation pressures seem likely to moderate over time, reflecting reduced impetus from energy prices, contained inflation expectations, and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."

Though not surprising, the news will surely come as good news to the manufacturing sector, where many executives are of the belief that the Fed has already overstepped its bounds in raising rates to their current level.

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