The US Federal Reserve has held interest rates at a 23-year high amid stubborn cost-of-living increases.
The central bank on Wednesday kept the benchmark lending rate at 5.25-5.50 percent after a series of economic reports indicated that inflation was easing at a slower pace than hoped.
Fed Chair Jerome Powell said inflation was “still too high” and rate cuts would not be on the cards until he had “greater confidence” that price growth was falling towards the 2 percent target.
“It is likely that gaining such greater confidence will take longer than previously expected,” Powell told a news conference after the end of a two-day policy meeting.
“We are prepared to maintain the current target federal funds rate for as long as appropriate.”
“Inflation is still too high, further progress in bringing it down is not assured, and the path forward is uncertain,” he said.
Powell said the rate cuts going forward would “depend on the data”.
“If we did have a path where inflation proves more persistent than expected, and where the labour market remains strong but inflation is moving sideways and we’re not gaining greater confidence, well, that would be a case in which it could be appropriate to hold off on rate cuts,” he said.
While the Fed’s preferred inflation index has cooled from its 2022 peak of 7.1 percent, it remains well above the 2 percent target, at 2.7 percent.
Powell, however, downplayed the likelihood of a rate hike at its next policy meeting in June.
“I think it’s unlikely that the next policy rate move will be a hike,” he said.
US stocks rallied following the closely-watched announcement, before ending mostly down as investors digested the latest decision.
The S&P 500 jumped as much as 1.2 percent in the afternoon, before closing 0.3 percent, while London’s FTSE 100 was down 0.3 percent.
In Asia, Japan’s Nikkei 225 index lost 0.64 percent in early trading.
Markets in Hong Kong and Shanghai were closed for a holiday.
