“Inflation picked up in recent months”, the Fed said in a policy statement in which it kept the target range for its overnight lending rate at 0.25 percent to 0.5 percent.
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The US central bank last raised rates in December, saying it expected to raise rates four times in 2016.
“The US Fed chair Janet Yellen also expressed concern that low inflation has very much cooled expectations about interest in the market”.
Prime Minister Narendra Modi, who wants to cut India’s oil imports by 10 per cent in six years, is steering efforts to buy foreign energy assets, taking advantage of low global oil prices and a slowdown in China’s overseas acquisitions.
However, it noted that the United States continued to face risks from an uncertain global economy.
Yellen said the central bank expects inflation to return to the 2 percent threshold – along with further economic growth and labor strides – within the next two to three years.
The S&P 500 closed at its highest level of the year on Wednesday after the US Federal Reserve left interest rates untouched and signalled fewer rate hikes in coming months.
Ms Yellen said in February that market turbulence had “significantly” tightened financial conditions by pushing down stock prices, causing the dollar to strengthen and boosting some borrowing costs.
The US dollar decreased against other major currencies as investors were digesting the Federal Reserve policy statement.
The Fed meeting came shortly after the Bank of Japan said it would maintain its current policy after adopting negative interest rates and authorities pledged to take additional measures to stimulate the economy.
Many economists believe policymakers will also pass up a chance to raise rates in April but will move rates up by a quarter-point in June and another quarter-point in December.
Benchmark 10-year note yields fell to one-week lows, while US two-year notes, the maturity most sensitive to Fed rate expectations, slid to a two-week trough.
Prior to the Fed announcement, gold’s rally this year prompted Morgan Stanley to raise its average gold-price estimate by 8 percent to $1,173 an ounce for 2016.
Steve Murphy, U.S. economist for Capital Economics, said the rise in core inflation suggests that the Fed will soon need to start raising rates to keep inflation from climbing too quickly.
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The Feds decision was approved 9-1, with Esther George, president of the Feds Kansas City regional branch, dissenting. The bank is expected to leave the interest rate unchanged at 0.5%.
