Fed holds interest rates steady - for now

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Jerome Powell, head of the US central bank

The US central bank has kept its key interest rate unchanged as it debates whether it has done enough to stabilise prices.

The decision left the Federal Reserve's rate target at 5.25%-5.5%, the highest level in more than two decades.

The bank has already raised borrowing costs from near zero in March 2022 in a bid to cool the economy and bring price inflation under control.

Some at the Fed expect further action to be needed.

Forecasts released after the meeting showed a majority of policymakers expect rates to stand above 5.5% by the end of the year, implying at least one further hike. They also saw rates remaining higher next year than previously forecast.

The announcement in the US comes ahead of Thursday's meeting of the Bank of England, which is facing its own inflation fight.

The Bank had been widely expected to announce a rate rise. But data on Wednesday showed UK consumer prices rose at a slower rate than expected last month, raising questions about its course of action. The European Central Bank will meet next week.

"The Fed is going through the same challenges other central banks are in terms of fine-tuning policy," said Sarah House, senior economist at Wells Fargo.

"Increasingly the risks are shifting from inflation being the one and only focal point, to having to balance the inflation fight to make sure the Fed doesn't do unnecessary damage."