Federal Reserve holds key US interest rate steady

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But for now, the Fed chief said, low inflation allows the central bank to be "patient" in deciding on any further changes to its overnight benchmark lending rate, which it left in a range of 2.25 percent to 2.50 percent on Wednesday. The Fed's preferred inflation gauge rose 1.55 percent in March year-on-year, well below the central bank's 2 percent target.

Two other USA central bankers sounded more comfortable with the current policy stance.

To recap the events from Wednesday, Federal Reserve policymakers voted to hold interest rates unchanged, citing a lack of inflation pressure.

The day featured a number of public remarks by USA central bankers, several of whom were taking part in a Hoover Institution monetary policy conference in Stanford, California.

Interest rates and inflation tend to be inversely correlated.

Clarida, in a speech to the conference, echoed Powell by noting the economy was in a "very good place" with inflation muted and expectations stable. "It really has no implications for policy", said Powell.

The Fed decision lifted US Treasury yields to a one-week high, while the dollar looked set to end the week on a firmer note as markets scaled back bets on a USA rate cut. She also said she was "not there" in response to a question about whether low-inflation concerns might lead to a rate cut.

Powell told reporters the decline in so-called core inflation was likely mostly due to transient factors, and he predicted it would rise back to the 2 percent target.

A diversity of views among officials is not uncommon at the central bank.

Messaging by the FOMC, such as the policy statement and subsequent press conference, "has difficulty communicating scenarios" in which they would alter policy, said Michael Gapen, chief US economist at Barclays Capital Inc.

A move like this would require careful messaging by Chair Powell. Ahead of the FOMC meeting, he called on the Fed in a series of tweets to cut the interest rates by one percentage point and implement some quantitative easing to stimulate the economy.

There may be an obvious reason for the unity around Powell at this time.

Warren Buffett, the 88-year-old billionaire investor, thinks Federal Reserve Chairman Jerome Powell is the best fit for the job, despite some criticism from the White House.

But stocks began pulling back after Fed Chair Jerome Powell said in a news conference that low inflation appeared "to be transient or idiosyncratic", a comment that analysts said suggested the USA central bank would not soon cut interest rates. And if Trump continues to browbeat the Fed in public comments, central bankers may feel obliged to dig in just to prove their independence. "It bands them together, but sometimes raising your hand and saying, "I disagree" can be an important way to communicate".

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