Officials at the US central bank have left interest rates at a 23-year high, while offering little certainty about the path ahead for borrowing costs.
The decision from the Federal Reserve again kept the target range for its benchmark rate, which helps set borrowing costs for mortgages, credit cards and other loans, at 5.25%-5.5%.
That is sharply higher than two years ago, when the Fed started raising rates to fight inflation.
Investors expect rate cuts this year.
But exactly when the bank will start to reverse course is being closely watched, especially as a slew of central banks in other countries, including the Bank of England which meets on Thursday, face similar decisions.
The Fed’s statement on Wednesday no longer floated the possibility higher rates.
Chairman Jerome Powell acknowledged that most members expect to start reducing rates this year but said, for now, the bank was looking for “greater confidence” that the inflation would continue to fall.
“We’re wanting to see more data,” he said, noting that much of the falls so far have been driven by prices for goods, rather than services.
The Fed has not raised interest rates since July, with this month’s meeting marking the fourth without change.
Supporters of rate cuts argue that the soaring price increases that pushed the central bank to start raising rates in 2022 have slowed.
The inflation rate, which tracks the pace of price rises, was 3.4% in the US in December – and is even lower by some measures, starting to approach the 2% rate the bank considers healthy.
Higher interest rates cool inflation by making borrowing more expensive, discouraging people and businesses from taking on debt.
As activity such as home purchasing and business expansion declines, the economy slows and the pressures pushing up prices ease.
Analysts say the Fed will not want to leave that weight on the economy indefinitely, for fear of triggering a recession.
But while growth has slowed and some sectors such as housing have been hit, broadly speaking, the economy has remained unexpectedly resilient, relieving pressure on the Fed to act.
Growth in the final months of the year proceeded at a 3.3% annual rate, while the unemployment rate in December was 3.7%, near historic lows.
In December, forecasts showed that most members of the Fed’s rate-setting committee expected rates to stand 0.75 percentage points lower at the end of this year.
Brian Coulton, chief economist at Fitch Ratings, said the statement showed that the Fed was comfortable with rates as they are and wanted to push back against market expectations of imminent cuts.
“The Fed sounds quite cautious about prematurely reaching the conclusion that inflation is moving back to 2% on a sustainable basis and wants more time to assess the evidence,” he said.
“With scant evidence of a slowdown in growth, a still tight labour market and elevated wage and services inflation, we don’t see rate cuts until June or July.”