Fed holds interest rates steady, says inflation targets will be sustained

The Federal Reserve held interest rates steady on Wednesday and expressed confidence that a recent rise in inflation to near the U.S. central bank's target would be sustained, leaving it on track to raise borrowing costs in June.

The Fed's rate-setting committee also downplayed a recent slowdown in economic and job growth, saying that activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.

In a statement following the end of a two-day policy meeting, the Fed said inflation had "moved close" to its target and that "on a 12-month basis is expected to run near the Committee's symmetric 2 percent objective over the medium term."

The Fed's decision to leave its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75 percent was unanimous. Investors had all but ruled out another increase at this week's meeting. The Fed raised rates in March.

Stock markets and bond yields were largely unmoved by the decision.