The Federal Reserve is maintaining its fed funds target rate of 5.25 to 5.5 percent. In its statement, the Federal Open Market Committee makes it clear they want to see inflation decline further, writing "The Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent."

Officials also spoke of recent economic strength, saying "economic activity has been expanding at a solid pace. Job gains have moderated since early last year but remain strong, and the unemployment rate has remained low." However, they did remove language that hinted more rate hikes could be on the table.

Yahoo Finance Federal Reserve Reporter Jennifer Schonberger reports the breaking details.

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Editor's note: This article was written by Stephanie Mikulich

Video Transcript

- No change. The Federal Reserve maintaining its benchmark interest rate in the range of 5.25% to 5.5%, but cautioning markets that they will not cut rates until they have more confidence that inflation is moving back sustainably to their target. From the statement, quote, "the committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%."

Though officials say they are still highly attentive to inflation risks and that they are moving closer to achieving price stability and maintaining employment that those are moving into better balance. Officials completely stripped language from the statement that kept a rate hike on the table in prior statements. They also removed language qualifying the US banking system as sound and resilient and also stripped out any talk of how tighter financial conditions or credit conditions could weigh on households.

Now in a nod to higher than expected GDP growth in the fourth quarter, officials characterized the economy as expanding at a solid pace though they noted that the outlook for the economy remains uncertain. This decision was unanimous. However, separately today, the Fed said that it is applying new investment restrictions to individuals holding stocks, bonds, and sector funds. These new restrictions applying to more staff that have access to confidential FOMC information. Back to you.

- And Jen as you were coming through that statement just then breaking that news, anything that surprised you, Jen?

- I was surprised that they were so straightforward. That they came out and said, listen, we are not cutting rates until we have more confidence that inflation is moving back towards 2%. I thought they may make some changes to language that they have maintained in the statement for numerous meetings, going back to the middle of last year. They did not do that. So this is a clear message to the market that hey guys, you want us to cut in March or in May and we may or may not be doing it. We're very data dependent and we need to have more confidence than inflation is moving sustainably back to 2%.

And also the fact that the economy has continued to surprise to the upside, it raises the question of whether if you continue to have economic growth that outperforms, does inflation re-accelerate based on that because you have strong demand? And that is a question mark that the Fed is going to have to tussle with this year.