The nation's economic growth had slowed to the slowest pace in four years in the first quarter, but U.S. Federal Reserve decided Wednesday to hold its target interest rate steady at 5.25 percent once again.

As a result of the decision, commercial banks' prime lending rate, the benchmark for millions of consumer and business loans, will remain at 8.25 percent. The prime rate responds to changes in the target rate, or the interest that commercial banks charge each other on overnight loans.

This was the seventh consecutive time that the central bank kept the target rate at 5.25 percent, where it has been at 5.25 percent since late June 2006.

After boosting rates at its 17 regular policy-setting meetings in a row over two years, the Fed paused in August last year and left rates alone in September, October, December, January and March.

The Wednesday decision was widely expected by economists. But many of them now forecast that the Fed will cut rates by the end of the year to make access to capital cheaper, which can stimulate expansion in economic activity.

The forecast is reflecting worries triggered by the weakening economic performance.

Preliminary data released by the government showed that the U.S. economy grew at an annual rate of only 1.3 percent in the first three months of this year. That was even weaker than the 2.5 percent growth pace in the final quarter of last year and marked the slowest quarterly growth rate since the same period of 2003.

The Fed, however, kept the same emphasis in its policy statement as in the previous ones despite of the sluggish economy, noting that inflation remains the "predominant policy concern."

"Economic growth slowed in the first part of this year and the adjustment in the housing sector is ongoing," said the statement. "Nevertheless, the economy seems likely to expand at a moderate pace over coming quarters."

Core inflation excluding energy and food remains "somewhat elevated" although inflation pressures seem "likely to moderate over time," the statement said, adding "the high level of resource utilization has the potential to sustain those pressures."

In these circumstances, the Fed's predominant policy concern remains "the risk that inflation will fail to moderate as expected," said the statement.

"Future policy adjustments will depend on the evolution of the outlook for both inflation and economic growth, as implied by incoming information," it said.