Federal Reserve Chairman Ben S. Bernanke and his colleagues issued a brief announcement saying they would leave the federal funds rate, the interest banks charge one another, at 5.25%.

The decision represents a break for borrowers. It means that banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain at 8.25%.

The Fed also had left rates unchanged at their last meeting in August, breaking a record string of 17 rate hikes that had driven the funds rate to its highest level in more than five years.

The decision to leave rates alone for a second time had been widely expected in financial markets, given recent favorable developments on inflation.

The Fed is trying to engineer a soft landing for the economy in which growth is slowed enough to keep inflation from getting out of hand without overdoing the credit tightening and raising the chances of a recession.

In its statement, the Fed continued to signal concerns about inflation, repeating a phrase it had used last time -- that the Fed's rate-setting panel "judges that some inflation risks remain."

The Fed also said -- as it had last time -- that "the extent and timing of any additional firming that may be needed to address these risks will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information."

The Fed took note of the slowdown that has occurred in the economy, saying that "economic growth has moderated from its quite strong pace earlier this year," which it attributed to the cooling housing market and the impact of previous Fed rate increases and higher energy prices.

The funds rate was at a 46-year low of 1% and the prime rate stood at 4% back in June 2004 when the Fed began a 2-year credit campaign to raise rates. The Fed boosted rates a record 17 consecutive times before deciding to pause at the last meeting Aug. 8.

The decision to keep rates unchanged Wednesday was supported by a 10-1 vote, with Jeffrey Lacker, president of the Fed's Richmond, Va., regional bank, again casting the lone no vote. Lacker, who also dissented in August, argued again that another quarter-point rate increase was needed to keep inflation in check.

Analysts are split on whether the current pause will be indefinite or whether at least one more rate increase will occur before the end of the year.

While global oil prices have fallen significantly from their highs above $77 per barrel, there are still worries about inflation pressures coming from wage increases outstripping productivity gains.

Economists who believe the Fed is finished raising rates point to the drop in energy prices as a major factor that will help slow price pressures going forward.

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