The Federal Reserve held Fed interest rates steady at 3.50%-3.75% on Wednesday in its most divided policy decision since 1992.
The 8-4 vote reflected widening disagreement inside the US central bank as officials flagged rising inflation risks linked to global energy prices.
“Inflation is elevated, in part reflecting the recent increase in global energy prices,” the Fed said in its policy statement.
The statement also said developments in the Middle East were adding “a high level of uncertainty” to the economic outlook. Three officials supported holding rates but dissented against keeping language that pointed to possible future cuts.
Cleveland Fed President Beth Hammack, Minneapolis Fed President Neel Kashkari and Dallas Fed President Lorie Logan opposed the easing-bias language, according to the Fed statement.
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Fed Governor Stephen M. Chan dissents in favour of a quarter-percentage-point rate cut. Fed Chair Jerome Powell said policy was “not on a preset course” and that officials would make decisions meeting by meeting.
The decision came as global oil prices stayed above USD 100 a barrel because of the US-backed war against Iran.
The Fed said unemployment had changed little in recent months and the economy continued to expand at a solid pace. Wall Street stocks stayed negative after the statement, while US Treasury yields rose.
Omair Sharif, president of forecasting firm Inflation Insights, said the divided vote made sense because the statement increased concern about inflation.
