Fed keeps rates at 23-year high amid stubborn price rises

US central bank cites lack of further progress’ towards its 2% inflation target

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The US Federal Reserve on May 1 held interest rates steady for a sixth straight meeting, keeping the level at a 23year high to fight stubborn price increases.

After a two-day gathering, the US central bank decided unanimously to keep the benchmark lending rate unchanged at 5.25 per cent to 5.50 per cent, citing a "lack of further progress" towards its 2 per cent inflation target.

"The economic outlook is uncertain, and the committee remains highly attentive to inflation risks," the Fed said in a statement.

For months, the US central bank had held its benchmark lending rate at a high level to cool demand and rein in price increases. A slowdown in inflation in 2023 had fuelled optimism that the first cuts had been on the horizon.

But inflation had accelerated, throwing cold water on hopes of an early rate reduction.

The Fed said it did not expect to lower rates until it had "greater confidence" that inflation was moving sustainably towards its target.

Federal Reserve chair Jerome Powell told a press conference: "It is likely that gaining such greater confidence will take longer than previously expected".

While the US central bank was prepared to hold rates at a high level for as long as appropriate, Mr Powell added that it was "unlikely that the next policy rate move will be a hike".