The Federal Reserve on Tuesday kept its benchmark interest rate at effectively zero, but policy makers gave no hint they would embark on another round of quantitative easing amid signs that the economy is getting back on track.
Instead, the Fed reiterated its conditional pledge to keep interest rates near zero through late 2014.
"Information received since the Federal Open Market Committee met in January suggests that the economy has been expanding moderately," the Fed said in a statement accompanying its decision.
The Fed acknowledged that labor market conditions have continued to improve, but noted that unemployment remains elevated despite falling to 8.3 percent.
Soaring prices at the pump will create only a temporary drag on the economy, according to the Fed, with overall inflation expectations remaining subdued.
"The recent increase in oil and gasoline prices will push up inflation temporarily, but the (FOMC) anticipates that subsequently inflation will run at or below the rate that it judges most consistent with its dual mandate," the Fed explained.
Although strains in the global financial markets caused by Europe's lingering sovereign debt crisis have eased, the central bank warned they pose "significant downside risks" to the economy.
Fed officials also said the housing sector remains "depressed," preventing a more robust recovery from taking hold.
Analysts say the FOMC, which has been replacing shorter-term Treasurys in its balance sheet with longer-term debt, will play the wait-and-see game until June, when the so-called Operation Twist program expires.
"Bottom line, in terms of market response, the statement is a non event," said Peter Boockvar, Managing Director at Miller Tabak. "Looking past this, the April meeting will give us color on the fate of Operation Twist in June and as long as doves populate the FOMC, the Fed will do more if the economy and markets turn down at some point."
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.