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."
UPDATED (3:40pm): A suspected gas explosion at a shopping mall in Taichung this morning has killed four people and injured 20 others, as emergency responders continue to investigate. The explosion occurred on the 12th floor of the Shin Kong Mitsukoshi in Situn District (西屯) at 11:33am. One person was declared dead at the scene, while three people were declared deceased later after receiving emergency treatment. Another 20 people sustained major or minor injuries. The Taichung Fire Bureau said it received a report of the explosion at 11:33am and sent rescuers to respond. The cause of the explosion is still under investigation, it said. The National Fire
ALL-IN-ONE: A company in Tainan and another in New Taipei City offer tours to China during which Taiwanese can apply for a Chinese ID card, the source said The National Immigration Agency and national security authorities have identified at least five companies that help Taiwanese apply for Chinese identification cards while traveling in China, a source said yesterday. The issue has garnered attention in the past few months after YouTuber “Pa Chiung” (八炯) said that there are companies in Taiwan that help Taiwanese apply for Chinese documents. Minister of the Interior Liu Shyh-fang (劉世芳) last week said that three to five public relations firms in southern and northern Taiwan have allegedly assisted Taiwanese in applying for Chinese ID cards and were under investigation for potential contraventions of the Act Governing
STAY WARM: Sixty-three nontraumatic incidents of OHCA were reported on Feb. 1, the most for a single day this year, the National Fire Agency said A total of 415 cases of out-of-hospital cardiac arrest (OHCA) occurred this month as of Saturday, data from the National Fire Agency showed as doctors advised people to stay warm amid cold weather, particularly people with cardiovascular disease. The Central Weather Administration yesterday issued a low temperature warning nationwide except for Penghu County, anticipating sustained lows of 10°C or a dip to below 6°C in Nantou, Yilan, Hualien and Taitung counties, as well as areas north of Yunlin County. The coldest temperature recorded in flat areas of Taiwan proper yesterday morning was 6.4°C in New Taipei City’s Shiding District (石碇). Sixty-three nontraumatic OHCA
COMMITTED: Lai said that Taiwan deeply appreciated the leaders’ statement, adding that the nation would remain steadfast in working to advance regional peace and prosperity US President Donald Trump and Japanese Prime Minister Shigeru Ishiba on Friday reaffirmed the importance of peace and stability in the Taiwan Strait in a joint statement issued after they met in Washington for their first official meeting. Trump and Ishiba “affirmed their determination to pursue a new golden age for US-Japan relations that upholds a free and open Indo-Pacific and brings peace and prosperity to a violent and disorderly world,” the US-Japan Joint Leaders’ Statement said. “The two leaders emphasized the importance of maintaining peace and stability across the Taiwan Strait as an indispensable element of security and prosperity for the