http://www.bloomberg.com/apps/news?pid=20601087&sid=awU.n8sp706Y&refer=homeBy Scott Lanman
Aug. 29 (Bloomberg) -- Federal Reserve officials saw their decision to suspend a two-year run of interest-rate increases as a ``close call'' and were unsure whether they would further raise borrowing costs, records of their last meeting showed.
``Many members thought that the decision to keep policy unchanged at this meeting was a close call and noted that additional firming could well be needed,'' the Fed said in minutes of the Aug. 8 meeting, released in Washington today. ``Members generally saw limited risk in deferring further policy tightening that might prove necessary.''
The records detail how central bankers wrestled with a dilemma: raise rates because of higher inflation fueled by an increase in energy costs, or hold back because of a housing slump that's weakening the economy's expansion. Most voting Fed members felt that the current rate stance may prove ``consistent with satisfactory economic performance.''
The 9-1 decision, which left the benchmark lending rate at 5.25 percent, was the first of Chairman Ben S. Bernanke's tenure to feature an opposing vote.
The dissenter, Richmond Fed President Jeffrey Lacker, wanted an 18th quarter-point increase because economic growth was not likely to slow enough to reduce inflation. In his view, ``further tightening was needed to bring inflation down more rapidly than would be the case if the policy rate were kept unchanged,'' the minutes said.
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