US Federal Reserve policymakers held the target interest rate unchanged Wednesday, citing "elevated uncertainty" partly due to the Mideast Gulf war.
The Fed, in its median economic projections, penciled in one possible quarter-point rate hike for this year, compared with a previously estimated quarter-point cut by the end of this year.
The Fed's rate-setting Open Market Committee (FOMC) kept the federal funds rate at 3.5-3.75pc in its fourth meeting of 2026, following quarter-point cuts in September, October and December last year.
"Economic activity is expanding at a solid pace despite elevated uncertainty owed, in part, to the conflict in the Middle East," the FOMC said after the first meeting chaired by Kevin Warsh, the recently Senate-confirmed new Federal Reserve chairman.
"Productivity growth and capital investment are strong. Job gains have kept pace with the workforce, and the unemployment rate has changed little.
"Inflation remains elevated relative to the Committee's two-percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy. The Committee will deliver price stability," the statement said.
The economic projections see PCE inflation ending the year at 3.6pc, up from 2.7pc in the March projection, with it falling to 2.3pc by the end of 2027. Fed officials see gross domestic product growth ending the year at 2.2pc, down from 2.4pc in the March projection.
