Fed holds rates steady as pressure mounts for a cut

The US central bank has left its key interest rate at a 23-year high, as expected, while leaving open the chance it will lower borrowing costs in the months ahead.

In a statement, the Federal Reserve said that its fight to stabilise prices had made progress, while noting that job gains had "moderated".

But officials said that for now, it remained appropriate to keep the target for the Fed's key rate in the range of 5.25%-5.5%, where it has stood since last July.

By keeping borrowing costs high, the Fed has been hoping to slow the economy and get price inflation under control.

But the bank is facing mounting pressure to cut rates as inflation eases and the job market cools.

The Fed's decisions are being closely watched around the world where many central banks are facing similar decisions.

Some banks, including the Bank of Canada and European Central Bank, have already announced rate cuts. Investors are divided about what the Bank of England will do at its own meeting this week.

In the US, many investors expect a rate cut as soon as September.

But the Fed's moves are complicated by the upcoming presidential election.

Analysts say a cut ahead of the November vote could benefit Democrats, as relief trickles out to households and businesses in the form of lower borrowing costs for homes, cars, credit cards and other loans.

Republican candidate Donald Trump has already suggested such a move would amount to playing politics and undermine the bank's claims to political independence.

But some analysts have warned that the Fed cannot afford to wait, as borrowing costs weigh on economic growth and risk triggering a painful downturn.