Fed holds benchmark interest rate steady at 3.75%-4%

The US Federal Reserve kept its benchmark interest rate unchanged at a range of 3.75% to 4% on Wednesday as policymakers weighed elevated inflation against strong economic growth.

The Federal Open Market Committee approved the decision in a 10-2 vote to support the central bank's dual mandate of maximum employment and stable prices, the Fed said in a statement.

Policymakers Lisa Cook and Beth Hammack dissented, preferring to raise the target range for the federal funds rate by 25 basis points at the meeting.

"Inflation remains elevated," the committee said, pledging that it "will deliver price stability."

"The accumulation of more information will help the Committee determine the policy stance appropriate to ensure a timely return of inflation to the Committee's 2 percent goal," it added.

The central bank noted that US economic activity is expanding at a strong pace, supported by resilient domestic spending, strong productivity growth and robust capital investment despite elevated uncertainty linked partly to geopolitical developments.

Job gains have kept pace with the workforce and the unemployment rate has changed little, the Fed said, adding that it is continuing its policy of maintaining ample reserves in the banking system.