Fed Holds Rates at 3.75%-4.00% in 10-2 Vote, Flags Elevated Inflation

The Federal Reserve kept its benchmark federal funds rate target range unchanged at 3.75%-4.00% following its two-day policy meeting, a decision approved by a 10-2 vote of the Federal Open Market Committee. The central bank said it will continue its policy of maintaining ample bank reserves. In its statement, the committee said economic activity is expanding at a strong pace, with resilient domestic spending, strong productivity growth and solid capital investment, while job gains have kept pace with the labor force and the unemployment rate has changed little. The Fed noted uncertainty remains elevated, partly reflecting geopolitical developments. Inflation remains elevated, the committee said, adding that it will be able to better assess the appropriate policy stance as more information becomes available and is committed to returning inflation to its 2% target in a timely manner. The Fed said it will achieve price stability.