Fed holds rates, says inflation rise is temporary (by Steve Goldstein)

WASHINGTON (MarketWatch) -- The Federal Reserve on Tuesday kept its interest rate target between 0% and 0.25% -- as it has since Dec. 2008 -- as the central bank said a rise in oil and gasoline prices will only "temporarily" push up inflation. Inflation will then run at or below the rate most consistent with its dual mandate, the central bank said. The Fed also maintained its Operation Twist program of shifting short-term bonds into longer-dated securities and reiterated the need to keep rates exceptionally low through at least 2014. The Fed continued to describe the economy as "expanding moderately" though it has acknowledged for the first time that global financial market strains have eased. As with the last meeting, there was one dissent, Richmond Fed President Jeffrey Lacker, who said he doesn't anticipate economic conditions are likely to warrant the exceptionally low levels through 2014.