Fed holds U.S. rates steady, cites balanced risks

WASHINGTON, Dec 10 (Reuters) - The Federal Reserve kept U.S. interest rates steady at four-decade lows as expected on Tuesday, saving its ammunition for 2003 as it waits to see whether the economy can weather the recent "soft spot."

The unanimous decision by the U.S. central bank's Federal Open Market Committee leaves the trend-setting federal funds rate at 1.25 percent, the level it hit after the Fed slashed borrowing costs by a bold half percentage point in November.

Fed policymakers also maintained their characterization of the risks faced by the economy as being evenly balanced between rising prices and a renewed downturn. That was the position policymakers adopted last month when they cut rates and it was seen as a signal of steady rates for some time ahead.