The Fed Leaves Target Rate Unchanged at 5.25%

The Federal Open Market Committee voted today to keep the target federal funds rate at 5.25%. The key differences from the last Press Release are:

1. They have dropped the word "gradual" from their description of the cooling of the housing market.

2. They see energy prices as moderating. The statement no longer mentions energy prices as a potential cause of slower growth, but energy prices are mentioned as a reason to expect inflation to moderate.

3. Just like last meeting, the vote wasn't unanimous - Jeffrey Lacker dissented.

4. The Committee notes, as it did last meeting, that inflation risks remain and further rate moves will depend upon how these risks play out. It does not mention risks to economic growth explicitly as it does with inflation, but housing is mentioned as a growth moderating factor.

Here's the current Press Release along with the previous statement for comparison. The highlighting has been added to emphasize the differences in the two statements:

Press Release for September 20	Press Release for August 8
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.	Identical
The moderation in economic growth appears to be continuing, partly reflecting a cooling of the housing market.	Economic growth has moderated from its quite strong pace earlier this year, partly reflecting a gradual cooling of the housing market and the lagged effects of increases in interest rates and energy prices.
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. 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.	Readings on core inflation have been elevated in recent months, and the high levels of resource utilization and of the prices of energy and other commodities have the potential to sustain inflation pressures. However, inflation pressures seem likely to moderate over time, reflecting contained inflation expectations and the cumulative effects of monetary policy actions and other factors restraining aggregate demand.
Nonetheless, the Committee judges that some inflation risks remain. 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.	Identical
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Susan S. Bies; Jack Guynn; Donald L. Kohn; Randall S. Kroszner; Frederic S. Mishkin; Sandra Pianalto; Kevin M. Warsh; and Janet L. Yellen. Voting against was Jeffrey M. Lacker, who preferred an increase of 25 basis points in the federal funds rate target at this meeting.	Identical except that Mishkin was not yet a member of the Board and did not vote.