US Fed keeps rates unchanged at 5.25%-5.5%, highest in 23 years

The US Federal Reserve on Wednesday kept its federal funds rate unchanged in the 5.25%-5.5% target range, as widely expected, which is the highest level in 23 years.

"In recent months, there has been modest further progress toward the Committee's 2 percent inflation objective," it said in a statement, replacing "there has been a lack of further progress" that was used in the previous statement on May 1.

The decision to keep rates unchanged was unanimous, with all 12 committee members voting in favor of the move.

The Federal Open Market Committee reiterated it does not expect that it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably towards its goal of 2%.

This is the fourth time the Fed has skipped a rate hike this year, after skipping interest rate increases four times during 2023. The central bank last made a rate hike of 25 basis points on July 26.

Over the course of 11 meetings from March 2022 to July 2023, the central bank raised rates by a total of 525 basis points to fight record inflation, which in the summer of 2022 rose to its highest point in more than 40 years.

After soaring to 9.1% in June 2022, annual consumer inflation significantly dropped to 3% in June 2023, but climbed to 3.7% in August before slowing down again to 3.4% in December.

Consumer inflation in the US annually rose 3.3% in May, slightly slowing down from April's 3.4% increase; and showed no monthly gain, according to the Labor Department figures released earlier Wednesday.