The Federal Reserve has held interest rates stead but in its most divided decision since 1992 noted rising concerns about inflation in a policy statement that drew three dissents from officials who no longer feel the US central bank should communicate a bias towards lowering borrowing costs.
A fourth dissent at the meeting came in favour of a quarter-percentage-point rate cut.
"Inflation is elevated, in part reflecting the recent increase in global energy prices," the Fed said in its policy statement, a shift from previous language saying that inflation was just "somewhat" elevated.
Developments in the Middle East are contributing to a high level of uncertainty about the economic outlook.
The 8-4 vote was the most divisive since October 6, 1992, and shows the breadth of opinion incoming Fed chair Kevin Warsh will face in pursuing rate cuts that US President Donald Trump says he expects from his chosen successor to Jerome Powell, whose term as central bank chief ends on May 15.
Although the latest policy statement retained language about how the Fed would assess the "extent and timing of additional adjustments" to rates, a phrase that pointed to future cuts as the next likely move, three policy makers objected.
Cleveland Fed president Beth Hammack, Minneapolis Fed president Neel Kashkari and Dallas Fed president Lorie Logan, while supportive of holding the policy rate steady in the current 3.50 per cent-3.75 per cent range, "did not support inclusion of an easing bias in the statement at this time" and voted against the new statement.
With global oil prices lodged above $US100 a barrel due to the US-backed war against Iran, the Fed has been hard-pressed to determine if the effects are likely to be seen more through depressed growth or higher inflation, keeping the policy rate in the range where it has been since December despite repeated urgings by Trump for looser monetary policy.
Alongside elevated inflation, "the unemployment rate has been little changed in recent months" while the economy continues to expand "at a solid pace," the Fed said.
The new statement is likely the last to be issued under Powell's leadership.
Earlier on Wednesday, the Republican-controlled Senate Banking Committee voted to advance Warsh's nomination on a party-line 13-11 vote.
The Senate is expected to confirm Warsh next month.
Powell is scheduled to hold a press conference later on Wednesday to elaborate on the results of the meeting and the economic outlook, and may also address whether he plans to remain at the Fed as a governor in a separate term that runs through January of 2028.
