The US central bank is no longer on autopilot when it comes to boosting interest rates.
The Federal Reserve's next move, at its meeting next month, could be another increase. Or it could opt for the first time in two years to take a break from its credit-tightening campaign and leave rates alone, depending on how economic activity and inflation unfold.
After bumping up borrowing costs steadily since June 2004, Fed Chairman Ben Bernanke and his colleagues on Wednesday suggested that future interest rate decisions will be much less predictable.
Those looking for a clear signal one way or the other about future moves didn't get one.
"The Bernanke monetary sphinx did not blink," said Brian Bethune, an economist at Global Insight.
The Fed's latest action pushed up the federal funds rate, which is the interest that banks charge each other on overnight loans, to 5 percent. It marked the 16th consecutive quarter-point increase in the past two years.
In response, commercial banks raised their prime lending rate by a corresponding amount, to 8 percent, for certain credit cards, home equity lines of credit and other loans.
Both the funds rate and the prime rate are at their highest points in just over five years.
Future decisions on interest rates, though, will hinge more heavily on what upcoming barometers say about economic activity and inflation, the Fed policymakers indicated.
If surging energy prices should spark broader inflation, the Fed could opt to bump up rates again. If the economy should show signs of slowing more than anticipated, a pause in rate raising could be in store.
"The Federal Reserve doesn't want to be viewed as being behind the curve in fighting inflation. At the same time, the other misstep they desperately want to avoid is to continue to hike rates just as business activity begins to downshift," said Bernard Baumohl, executive director of the Economic Outlook Group, a consulting firm.
Fed policymakers offered a largely positive assessment of the economic climate, although they continued to express concern about the potential for inflation to flare up.
Further moves "may yet be needed to address inflation risks," they said.
Any such action, they added, "will depend importantly on the evolution of the economic outlook as implied by incoming information."
Economists said this language -- more detailed than a previous policy statement on March 28 -- gave the Fed more flexibility in terms of future interest-rate decisions.
If the economy doesn't slow to a more sustainable pace and high energy prices start feeding into the prices of lots of other goods and service, then the Fed could opt to boost rates at its next meeting on June 28-29, or at some other point.
However, if economic growth does slow -- something that could reduce inflationary pressures -- then the Fed might pause in its rate-raising campaign at the meeting next month, or later this summer.
Many economists believe the Fed will take a break from rate-raising, although they have mixed opinions on when that will happen.
One challenge facing the Fed is figuring out whether high energy prices will feed inflation, slow overall economic activity or perhaps lead to both scenarios.
Another challenge is gauging the extent to which the housing market, which racked up record-high sales five years in a row, will slow this year. A slowdown in the housing market probably would crimp consumer spending and, thus overall economic activity.