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Federal Reserve Chairman Jerome Powell speaks at the Economic Club of Chicago luncheon at the Hilton Chicago on April 6, 2018.

Federal Reserve Chairman Jerome Powell speaks at the Economic Club of Chicago luncheon at the Hilton Chicago on April 6, 2018. (Antonio Perez/Chicago Tribune/TNS)

WASHINGTON - Federal Reserve officials held a key interest rate steady Thursday and appeared to stay on course for another hike next month despite criticism from President Trump and a new concern about business spending.

Analysts had expected the Fed to hold the target of its benchmark short-term rate at between 2 percent and 2.25 percent after concluding a two-day monetary policy meeting this week. The rate had been inched up 0.25 of a percentage point in September, the third such hike this year.

Fed officials voted 9-0 Thursday to keep the federal funds rate at its current level.

In a post-meeting statement, they said that U.S. economic activity "has been rising at a strong rate," the labor market continues to strengthen and household spending is growing strongly. But they added a new note of caution.

Fixed business investment "has moderated from its rapid pace earlier in the year," the statement said. In recent months, Fed statements have noted that spending was growing "strongly."

The new characterization, which reflects recent economic data, could indicate Fed officials are considering slowing the pace of rate hikes if the trend continues.

Fed officials have indicated they would enact four small hikes this year and three more next year to push the rate over 3 percent, which still would be low for a robust economic expansion.

Investors are betting the next hike will come at the central bank's Dec. 18-19 meeting even though Trump has said he's not happy that the rate has been rising in the face of strong economic growth.

The Fed's chairman, Jerome H. Powell, was handpicked by Trump and took over in February. Fed monetary policymakers adjust the rate based on economic conditions. They lower it when growth is slow to stimulate spending and raise it when growth strengthens to keep the economy from pushing up prices too quickly.

Trump frequently has criticized the independent Fed as it has slowly moved up its benchmark short-term interest rate. Presidents historically have refrained from publicly commenting on the Fed's monetary policy to avoid giving investors the impression that politics is influencing interest rate decisions.

Before Trump, the last time a president publicly criticized the Fed was in 1992.

Last month, Trump amped up his denunciation of the Fed, saying it "has gone crazy" and accusing officials of triggering a financial market sell-off by following a long-telegraphed plan to slowly raise the benchmark rate as economic conditions improved.

Analysts said that Trump's policies, such as the trade war with China, were a bigger factor in the market volatility than the Fed's actions.

Economic growth slowed in the third quarter to an annual pace of 3.5 percent from 4.2 percent the previous quarter. Growth is expected to slow further in the fourth quarter as the stimulus fades from the tax cuts that took effect on Jan. 1.

But the economy remains strong enough for Fed officials to keep raising the interest rate to avoid high inflation. The Fed's preferred measure for annual inflation, based on personal consumption expenditures, was 2 percent in September - right at the central bank's target.

Visit the Los Angeles Times at www.latimes.com

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