But markets were waiting for a statement from the central bank, to be released at the end of the meeting on Wednesday, that would indicate it still regards inflation as the prime risk to the world's biggest economy - and that it is thus poised to resume raising rates later in the year.

The expected decision to stand pat for now would come after six successive increases in the benchmark federal funds overnight bank lending rate since June of last year, which have raised it by a total of 1.75 percentage points to 6.5 per cent. With credit costs now at their highest level in almost a decade, Fed officials feel comfortable about sitting back and waiting for more conclusive evidence of a US soft landing that would help allay fears of higher inflation prompted by still-robust consumer demand and a drum-tight labour market.

"The Fed feels that policy is properly positioned for the current environment," Morgan Stanley Dean Witter, New York's, chief money market economist, William Sullivan, told Reuters television. "But they will pledge their vigilance to stay in front of this inflationary curve, and we feel you'll get a rate hike later this summer," he added.

While not exactly overwhelming, the signs of a slowdown in the red-hot rate of US growth have been unmistakable of late.

The US labour market simmered down in May as the jobless rate rose to 4.1 per cent from 3.9 per cent, the lowest in a generation. Retail sales, one of the key drivers of growth, slipped for the second month in a row in the same month.

The list goes on. Consumer confidence fell in June as Americans anticipated that slower growth ahead would make it more difficult to find jobs, and manufacturing activity came in lower than economists had expected last month.Economists say the data indicate that the Fed's six rate rises over the past year are finally starting to have an effect on the US economy, now in its longest-ever expansion.