Ankara: The US Federal Reserve kept its benchmark interest rate unchanged Wednesday as three policymakers voted in favor of a quarter-point increase. The Federal Open Market Committee maintained the federal funds rate target range between 3.5% and 3.75% in a 9-3 vote.

According to Anadolu Agency, Beth Hammack, Neel Kashkari, and Lorie Logan opposed keeping the rate unchanged, preferring to raise the target range 25 basis points at the meeting. The Fed said economic activity continued to expand at a solid pace despite heightened uncertainty partly stemming from the war in the Middle East.

Productivity growth and capital investment remained strong, while job gains kept pace with labor force growth and the unemployment rate changed little. The central bank noted that inflation remained above its 2% target, partly due to supply shocks that pushed up prices in some sectors, including energy.

In June, US annual consumer inflation eased to 3.5% from 4.2% in May, as energy prices fell 5.7% during the month, more than offsetting increases in food and shelter costs. The Consumer Price Index (CPI) fell 0.4% in June from the previous month after rising 0.5% in May, marking its first monthly decline in six years and the steepest monthly decrease since April 2020.

Meanwhile, the US economy added 57,000 jobs in June, much less than estimates, while the unemployment rate was down to 4.2% from 4.3%. The Fed said it would continue its policy of maintaining ample reserves in the banking system. As in June, the statement added: 'The Committee will deliver price stability.'

Officials favoring tighter policy have argued that persistent inflation continues to burden households, with recent price pressures reflecting tariffs imposed by President Donald Trump and higher energy costs linked to the war with Iran. Fed officials' projections released in June indicated a one-quarter-percentage-point rate increase by the end of 2026.

Governor Christopher Waller recently said higher rates could be needed if inflation failed to ease further, although he voted to keep rates unchanged at the meeting. Fed Chair Kevin Warsh has also emphasized the need to control inflation while criticizing the Fed's previous use of forward guidance. The statement remained considerably shorter than had previously been customary, reflecting his effort to change the central bank's communication strategy.

Fed officials had expressed differing policy views ahead of the meeting. New York Fed President John Williams said policy was well positioned to return inflation to target, while Logan argued that modestly higher rates would be needed. Hammack has also highlighted the pressure that persistent price increases are placing on households. Earlier this week, Trump praised Warsh as 'fantastic,' while accusing some other Fed officials of having political motivations.