As expected, the central bank's policymakers chose to leave the Fed's benchmark interest rate unchanged.

According to reporter Jennifer Jacobs at Bloomberg, Trump told confidants as recently as Wednesday that he believes he has the authority to replace Jerome Powell as chairman of the Federal Reserve Board. United States 10-year yields fell below 2% to its lowest since November 2016 and the lingering softness from the Fed overnight is weighing on the greenback as well this morning.

The Fed didn't specify when it would decrease rates, but almost half of Fed leaders now predict rates will fall by the end of the year, a significant change from March when none of the 17 Fed policymakers anticipated a cut this year.

The Fed should not be under the president's influence in setting monetary policy, US Congress House of Representatives Speaker Nancy Pelosi said on Wednesday. That suggested that the central bank is now inclined to begin cutting rates for the first time in more than a decade. But Powell said he intends to complete his four-year term, even if formally asked to step down.

It offered the prospect of an economy strong enough to support above-zero real rates, and a return to more normal times when routine savings accounts might produce a positive real return.

The Fed indicated it would take action if the economy shows any more signs of decline.

St. Louis Fed President James Bullard, who had argued that rates should be cut, dissented in Wednesday's policy decision to hold rates steady. It marked the first dissent from a Fed decision since Powell became chairman in February past year.

Officials were starkly divided on the path for policy. However, the "dot plot" of FOMC members' expectations revealed that the Fed was just about evenly split on the interest rate decision: eight members favor one rate cut this year; eight prefer for rates to stay unchanged; and one wants a rate hike.

The Fed statement indicates as directly as the Fed dare say it that plummeting inflation expectations are a worry.

"At the Fed, we're deeply committed to carrying out our mission and also that our independence from direct political control we see as an important institutional feature that has served both the economy and the country well", he said.

In the statement, officials downgraded their assessment of economic activity to a "moderate" pace from "solid" at their last gathering. -China trade talks. The world's two biggest economies have imposed increasingly severe tariffs on each other's imports. Powell mostly blamed the USA trade war with China and weakening economic data as reasons for the dovishness. Trade tensions have heightened uncertainty among companies, investors and foreign leaders and may be weighing on business investment.

They also expect to miss their 2 per cent inflation target next year as well.

The Fed left its key interest rate unchanged in a range of 2.25% to 2.5%, where it has been since December. Almost half its policymakers now show a willingness to lower borrowing costs over the next six months.

-With assistance from Chris Middleton, Alex Tanzi, Ben Holland, Katia Dmitrieva and Reade Pickert.

That opens the door to the prospect that if the US does begin to cut rates later this year, the Bank of Canada's Stephen Poloz may not be forced to follow suit.