US Stock Market: Fed holds rates over 'uncertain' war impact

Washington: The US Federal Reserve kept interest rates unchanged on Wednesday as expected, in defiance of President Donald Trump as the world's largest economy battles stubborn inflation, weak labour demand and an "uncertain" outlook due to the war in Iran.

The Fed's 11-1 vote kept rates steady at a range between 3.50% and 3.75%, with officials flagging one expected rate cut by the end of the year.

"The implications of developments in West Asia for the US economy are uncertain," the Fed said in a statement.


The bank cut rates three consecutive times late last year before holding them steady at its January meeting. It has a dual mandate of maintaining inflation near a long-term target of 2% while ensuring maximum employment.

Affordability has been a key political issue for Trump, who has repeatedly called for rates to be slashed even as prices have remained stubbornly high. "Uncertainty about the economic outlook remains elevated," the Fed said Wednesday, while noting that economic activity was "expanding at a solid pace."

"Job gains have remained low, and the unemployment rate has been little changed in recent months. Inflation remains somewhat elevated."

The US central bank also released its quarterly summary of economic projections, expecting year-end fourth quarter GDP growth to come in at 2.4% year-on-year.