Fed holds policy rate steady, says inflation remains elevated amid energy shock

• Fed removes previous easing bias in Kevin Warsh's first meeting as chair, with projections no longer signaling rate cut this year

The US Federal Reserve on Wednesday kept its policy rate unchanged, as widely expected, saying inflation remains above its 2% target partly due to supply shocks, including energy.

The Federal Open Market Committee (FOMC) decided by a 12-0 vote to maintain the target range for the federal funds rate at 3.5%-3.75%, in support of the Fed’s dual mandate.

The decision marked Kevin Warsh’s first FOMC meeting as Fed chair, putting his leadership immediately under scrutiny as policymakers faced persistent inflation, energy-driven supply shocks and uncertainty linked partly to the Middle East conflict.

“Economic activity is expanding at a solid pace despite elevated uncertainty that owes, in part, to the conflict in the Middle East,” the Fed said in its statement.

The Committee said productivity growth and capital investment remain strong, while job gains have kept pace with the workforce and the unemployment rate has changed little.

“Inflation remains elevated relative to the Committee’s 2 percent goal, in part reflecting supply shocks that have driven price increases in certain sectors, including energy,” it added.

The Fed also reaffirmed its policy of maintaining ample reserves in the banking system and said it “will deliver price stability.”

President Donald Trump said that "it's alright, whatever" when asked about the Fed's decision to hold rates.

"It could happen. I mean, it's hard to believe. It just keeps a country down," Trump told reporters in France.

Trump hailed Warsh, saying that “we have a very good guy over there now, so I'm guided by what he wants."

*Diyar Guldogan from Washington, DC contributed to this report