The US Federal Reserve has kept its key interest rate steady for the sixth straight time.
The Federal Open Market Committee unanimously decided to hold its key interest rate at 5.25-5.5% in May, citing expanding economic activity and easing but elevated inflation, according to a statement on Wednesday night.
"The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent," said the FOMC statement. "The economic outlook is uncertain, and the Committee remains highly attentive to inflation risks."
The central bank had hiked the rates by 25 basis points in July last year, which took the benchmark rate to its highest in 22 years. In September, November, December, January, March and May, it has kept them unchanged.
"Recent indicators suggest that economic activity has continued to expand at a solid pace. Job gains have remained strong, and the unemployment rate has remained low. Inflation has eased over the past year but remains elevated. In recent months, there has been a lack of further progress toward the Committee's 2 percent inflation objective," the note said.
The Committee seeks to achieve maximum employment and inflation at the rate of 2% over the long run, it added.
The risks to achieving the employment and inflation goals have moved towards better balance over the past year, according to the Committee.
In his speech, Fed Chair Jerome Powell said that while the economy has made considerable progress toward goals, but inflation still remains high and the Fed is committed to returning to 2%.
Gaining confidence to cut will take longer than thought, he said. Shorter-term inflation expectations have increased and Fed will continue to make decisions meeting by meeting, according to Powell. He said that when the Committee gets the confidence, rate cuts will be in scope, though they don't know when that will happen.
Powell mentioned that the labour market is relatively tight, but better balanced. "Labour demand still exceeds supply of available workers," he said.
A decision on a rate cut timing will depend on the data, he said. Unexpected weakening in labour market could warrant a cut and whether rates are at peak will depend on data, according to Powell.
He highlighted that the Committee has seen progress on wages, but "there is still a long way to go". The Committee may take some time, but "we will bring inflation to 2%", he said.
Essential Business Intelligence, Continuous LIVE TV, Sharp Market Insights, Practical Personal Finance Advice and Latest Stories — On NDTV Profit.
