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Fed stands pat on rates but remains mum on cut

WASHINGTON -- The Federal Reserve kept interest rates steady, giving holiday shoppers a reason for some cheer. However, the Fed held back an extra gift Wall Street was hoping for: a signal that rates might actually be lowered soon.

Fed chairman Ben Bernanke and all but one of his central bank colleagues agreed yesterday to leave an important rate unchanged at 5.25 percent, the fourth straight meeting without budging the rate.

That means commercial banks' prime interest rate -- for certain credit cards, home equity lines of credit, and other loans -- stayed at 8.25 percent, once again giving a break to borrowers who until this summer had endured the pain of two-plus years of rate increases.

"The Fed is not acting like the Grinch this Christmas. But it is not putting presents in anyone's stocking, either," said Mark Zandi, chief economist at Moody's Economy.com.

On Wall Street, stocks dipped as disappointed investors failed to get a sign that the Fed was moving toward cutting rates. The Dow Jones industrials lost 12.90 points to close at 12,315.58.

Discussing economic conditions, Fed policy makers said growth has slowed over the course of the year, partly reflecting a "substantial cooling" of the housing market.

Nonetheless, policy makers stuck with their previous judgment that the economy probably will expand at a moderate pace in coming quarters.

Still, the Fed didn't hint that it would actually cut rates any time soon as some Wall Street investors would like.

Instead, it once again kept open the possibility of a rate increase if inflation should show signs of flaring up.

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