Where it’s at: Fed Holds Key Interest Rate Steady

Today’s meeting of the Federal Reserve kept Wall Street investors on edge, but at the end of the day, the top U.S. financial officials decided not to raise interest rates.

The Federal Open Market Committee, with the agreement of Fed Chairman Ben Bernanke, will keep the federal funds rate a 5.25 percent, according to the Central Valley Business Times.

As a result, U.S. mortgage rates - which correlate closely to the federal funds prime rate - are expected to hold steady for the near future, if not fall by a bit.

According to the Federal Reserve, recent economic indicators have suggested somewhat firmer economic growth, and some tentative signs of stabilization have appeared in the housing market.

Overall, the economy seems likely to expand at a moderate pace over coming fiscal quarters, and the risk of inflation has tapered off, making the decision to leave rates where they are now prudent.

“Readings on core inflation have improved modestly in recent months, and inflation pressures seem likely to moderate over time,” the Fed’s report states.

However, the high level of resource utilization - in other words, Americans’ energy consumption and the possibility of rising energy bills - retains the potential to sustain inflation pressures.

While experts believe that mortgage loans will remain around the same levels of interest throughout 2006, the Federal Reserve cautions 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.

The group will next meet March 21. Until then, don’t expect much movement when it comes to the prime mortgage interest rates consumers are charged by lenders.