Fed Halts Interest-Rate Hikes

To help stave off inflation, the Federal Reserve voted against an increase for the first time in two years.

For the first time in two years, the Federal Reserve voted against raising interest rates  on Tuesday, ending a cycle of 17 consecutive hikes that began in mid 2004.

Instead, the Fed opted to hold its benchmark rate at 5.25%, saying the recent slowdown in economic growth  will prevent inflation from spiraling out of control.    

"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," the central bank's Federal Open Market Committee said in a statement.

Still, the bank didn't rule out rate hikes in the months ahead, depending on the outlook for both inflation and economic growth, the Fed said.

The U.S economy grew by an annual rate of just 2.5% in the second quarter, compared to 5.2% over the previous quarter. Despite the slower pace, core consumer prices -- which excludes volatile food and energy costs -- rose by 2.4% in June, the Commerce Department reported last week.