The US Federal Reserve on Tuesday left its benchmark interest rate at 5.25 percent, ending a record string of 17 straight increases dating back to 2004.
But the Fed also said that "some inflation risks still remain" and left the door open for further rate increases later in the year, sending US stocks lower after the announcement.
In a 9-to-1 vote, the Federal Reserve Board said it based its current decision on a slowing US economy.
PHOTO: AFP
"Economic growth has moder-ated from its quite strong pace earlier this year," a statement from the board said, adding that it would keep a close eye on inflation and economic growth until its next meeting in six weeks.
"The extent and timing of any additional firming that may be needed to address these [inflation] risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information," the statement said.
US stocks fell as investors worried that slowing economic growth would hurt corporate profits despite the pause in rates hikes.
The Dow Jones industrial average fell 45.79 points, or 0.41 percent, to end at 11,173.59. The Standard & Poor's 500 Index declined 4.29 points, or 0.34 percent, to finish at 1,271.48. The NASDAQ Composite Index dropped 11.65 points, or 0.56 percent, to close at 2,060.85.
"Once the dust settled, the Fed is [saying] their forecast is not the best one for the equity market," said Joe Liro, market strategist for Stone & McCarthy Research Associates, in Princeton, New Jersey.
With the "housing sector weakening, the consumer sector a little soft and even the investment side looking a little bit dicey -- the three cornerstones of private-sector growth are looking a bit tepid," he added.
Federal Reserve Bank of Richmond president Jeffrey Lacker was the only member who preferred a quarter-point rate hike on Tuesday, marking the first dissenting voice since Fed Chairman Ben Bernanke took over from Alan Greenspan in February.
The benchmark rate has climbed a quarter-point at each Fed meeting since June 2004, from a then historic low of 1 percent to the current 5.25 percent rate.
The Dow Jones Industrial Average closed down 0.4 percent on the announcement.
Leading up to Tuesday's meeting, economists had been hopeful that a slew of recent economic data pointing to a slowdown in growth would persuade the Fed to leave the rate unchanged, though predictions were far from unanimous.
GDP increased at a lower-than-expected 2.5 percent annualized rate in the second quarter of this year, after a 5.6 percent rise in the first quarter, while unemployment climbed to 4.8 percent last month from 4.6 percent in June -- the first monthly jobless rate increase since November.
In a Bloomberg survey of economists, 72 percent predicted Tuesday's outcome -- the least agreement found in three years.
Fed members had voiced concerns over both the slowing economy and still high inflation since their last meeting in June, sending markets periodically up and down in the process.
In one indication of Tuesday's rate halt, Bernanke acknowledged last month the slowing US economy and said the Fed must guard against raising interest rates too high, sparking a 200-point surge in the Dow.
Tuesday's statement suggested that inflation had been kept in check by earlier rate increases, at least temporarily: "Inflation pressures seem likely to moderate over time, reflecting contained inflationary expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand."
ROLLER-COASTER RIDE: More than five earthquakes ranging from magnitude 4.4 to 5.5 on the Richter scale shook eastern Taiwan in rapid succession yesterday afternoon Back-to-back weather fronts are forecast to hit Taiwan this week, resulting in rain across the nation in the coming days, the Central Weather Administration said yesterday, as it also warned residents in mountainous regions to be wary of landslides and rockfalls. As the first front approached, sporadic rainfall began in central and northern parts of Taiwan yesterday, the agency said, adding that rain is forecast to intensify in those regions today, while brief showers would also affect other parts of the nation. A second weather system is forecast to arrive on Thursday, bringing additional rain to the whole nation until Sunday, it
LANDSLIDES POSSIBLE: The agency advised the public to avoid visiting mountainous regions due to more expected aftershocks and rainfall from a series of weather fronts A series of earthquakes over the past few days were likely aftershocks of the April 3 earthquake in Hualien County, with further aftershocks to be expected for up to a year, the Central Weather Administration (CWA) said yesterday. Based on the nation’s experience after the quake on Sept. 21, 1999, more aftershocks are possible over the next six months to a year, the agency said. A total of 103 earthquakes of magnitude 4 on the local magnitude scale or higher hit Hualien County from 5:08pm on Monday to 10:27am yesterday, with 27 of them exceeding magnitude 5. They included two, of magnitude
CONDITIONAL: The PRC imposes secret requirements that the funding it provides cannot be spent in states with diplomatic relations with Taiwan, Emma Reilly said China has been bribing UN officials to obtain “special benefits” and to block funding from countries that have diplomatic ties with Taiwan, a former UN employee told the British House of Commons on Tuesday. At a House of Commons Foreign Affairs Committee hearing into “international relations within the multilateral system,” former Office of the UN High Commissioner for Human Rights (OHCHR) employee Emma Reilly said in a written statement that “Beijing paid bribes to the two successive Presidents of the [UN] General Assembly” during the two-year negotiation of the Sustainable Development Goals. Another way China exercises influence within the UN Secretariat is
Taiwan’s first drag queen to compete on the internationally acclaimed RuPaul’s Drag Race, Nymphia Wind (妮妃雅), was on Friday crowned the “Next Drag Superstar.” Dressed in a sparkling banana dress, Nymphia Wind swept onto the stage for the final, and stole the show. “Taiwan this is for you,” she said right after show host RuPaul announced her as the winner. “To those who feel like they don’t belong, just remember to live fearlessly and to live their truth,” she said on stage. One of the frontrunners for the past 15 episodes, the 28-year-old breezed through to the final after weeks of showcasing her unique