Summary

• US central bank leaves policy rate in 4.25%-4.50% range

• Two Fed governors dissent on policy decision

• Trump has repeatedly demanded that Fed cut rates

The Federal Reserve held interest rates steady on Wednesday in a split decision that gave little indication of when borrowing costs might be lowered and drew dissents from two of the U.S. central bank's governors, both appointees of President Donald Trump who agree with him that monetary policy is too tight.

"The unemployment rate remains low, and labor market conditions remain solid. Inflation remains somewhat elevated," the central bank said in a policy statement released after the Federal Open Market Committee voted 9-2 to keep its benchmark overnight interest rate steady in the 4.25%-4.50% range for the fifth consecutive meeting.

The policy statement did note that economic growth "moderated in the first half of the year," possibly bolstering the case to lower rates at a future meeting should that trend continue. But it also said that "uncertainty about the economic outlook remains elevated" with risks to both the Fed's inflation and employment goals, language that has anchored the central bank's reluctance to cut rates until the path of inflation and jobs becomes clearer.

This week's meeting marks the first time in more than 30 years that two members of the Fed's seven-person Washington-based Board of Governors voted against a rate decision at the consensus-driven central bank, and it will likely stoke debate about how Trump's public pressure to cut rates is playing out at an institution designed to set monetary policy independent of demands from elected officials.

Both Vice Chair for Supervision Michelle Bowman and Governor Christopher Waller, who has been mentioned as a possible nominee to replace Fed Chair Jerome Powell when his term expires next May, were appointed to the board by Trump and "preferred to lower the target range for the federal funds rate by one quarter of a percentage point at this meeting," the Fed's policy statement said.

Powell, a bipartisan figure who was appointed to the Fed's board by former President Barack Obama and later promoted to the top job by Trump, voted to hold rates steady, as did three other governors and the five Fed regional bank presidents who currently hold a vote on the rate-setting FOMC. The Fed's regional bank presidents are hired by local boards of directors who oversee the Fed's 12 regional institutions.

Governor Adriana Kugler was absent and did not vote.

Dissenting members of the FOMC often release statements explaining their vote on the Friday following Fed meetings.

'WAIT-AND-SEE' APPROACH

In the wake of the release of the Fed's policy statement, the front end of the Treasury yield curve saw earlier yield increases trimmed, while stock prices slid modestly from levels ahead of the decision. Futures markets modestly increased the odds the Fed will lower rates at its September policy meeting.

The data since the Fed's June 17-18 meeting has given policymakers little reason to shift from the "wait-and-see" approach they have taken on interest rates since Trump's January 20 inauguration raised the possibility that new import tariffs and other policy shifts could put upward pressure on prices. The unemployment rate is still low at 4.1%, and recent inflation data showed faster increases for some heavily imported goods - a development policymakers will watch in the coming weeks.

The Commerce Department earlier on Wednesday reported that U.S. growth rebounded more than expected in the second quarter, but declining imports accounted for the bulk of the improvement and domestic demand rose at its slowest pace in 2-1/2 years.

Trump has berated Powell in particular for not cutting rates to try to lower the government's borrowing costs, a concern outside the Fed's congressionally-mandated goals of maintaining stable inflation and maximum employment.