Fed stays put; how brief is the relief?

Source : Moneycontrol.com

The Fed springed no surprises at the meet last night. It kept the benchmark interest rate unchanged at 5.25%. The FOMC's predominant policy concern continues to be the risk that inflation will fail to moderate as expected. The FOMC statement released said that the tight job market may sustain pricing pressure.
For almost a year now, the Fed has snapped its streak of rate hikes, but how long will the Fed keep rates on hold?
Peter Hooper, Chief US Economist of Deutsche Bank, believes that the Fed may continue to be on hold for a while. He expects a sustained relief rally in the dollar in the near-term. He said, "The odds on a rate cut have slipped a great deal. We are at 50-50, maybe edging slightly on the side of rate increase, but Fed is a good way from either direction of move at this point. They have pretty solidly planted at 5.25% for sometime to come."
Though, he believes, there is still reason to be concerned on inflation.
So will there be a rate-hike?
Citing subprime as an issue in markets, Glen Maquire, Asia Economist, Societe Generale, doesn't think the Fed will be in a position to cut rates. He said, "Not withstanding the re-emergence of subprime as an issue in the financial markets, I think the risk is still overwhelmingly skewed towards higher inflation."
"So the risk of a cut is quite small and the probability is turning more towards rate hikes from the US Federal Reserve. We believe global growth continuing to be strong for the next two years above 5%. The Fed is likely to be raising interest rates in 2008, probably three times to 6%. The probability of rate cuts from the Fed is extremely low at this point," he concedes.
Prasenjit K Basu, Chief Economist, Daiwa Securities, said that there was no surprise from the Fed and no change in its approach. On why Asian markets aren’t reacting to the US Fed leaving interest rates unchanged, he said, “There was really no surprise from the Fed. It is no longer talking about elevated inflation and that’s the only significant change. Otherwise, there is no significant change in the Fed’s approach. I think the markets have already moved keeping in mind that the next move by the Fed is likely to be up rather than down, somewhere between December-February next year.”