The Federal Reserve has held interest rates at their highest level in two decades, signaling that rate cuts will come later than markets had anticipated. Persistent inflation, particularly in services and housing, has complicated the central bank's path toward easier monetary policy.

Chair Jerome Powell emphasized the Fed's commitment to returning inflation to its 2% target, even if that means keeping rates elevated longer. The decision disappointed investors who had expected cuts to begin in early 2024.

"We need greater confidence that inflation is moving sustainably toward 2%," Powell said at his post-meeting press conference.