The Federal Reserve is leaving its most important interest rate unchanged, the central bank announced Wednesday, while saying that the U.S. economy is shrugging off slowing growth overseas.
The Fed's overnight lending rate remains at 0.25 to 0.50 percent.
"The Fed remains cautious, likely keeping policy on hold at least until June," said Michael Gregory, deputy chief economist with BMO Captial Markets, in a note.
In its statement, the Federal Open Market Committee wrote, "Economic activity has been expanding at a moderate pace despite the global economic and financial developments of recent months. Household spending has been increasing at a moderate rate, and the housing sector has improved further; however, business fixed investment and net exports have been soft."
On jobs, the committee wrote, "A range of recent indicators, including strong job gains, points to additional strengthening of the labor market."
While noting that the U.S. economy remains resilient, Fed Chair Janet Yellen sounded a dovish note in a press conference following the FOMC statement, citing weaker global economic growth, tightening financial conditions and persistently soft inflation.
"There has been a slight downgrading of economic growth for this year," she said, highlighting an ongoing slowdown in China and emerging markets.
In the U.S., that calls for a "slightly more accommodative path" for raising interest rates, Yellen said. FOMC members now expect to raise the federal funds rate twice this year, down from the four hikes they forecast at their December meeting.
The vote to leave rates unchanged was 9-1. Kansas City Federal Reserve Bank President Esther George was the lone dissenter, favoring a 0.25 percent increase.
The median unemployment forecast by members of the FOMC, which sets short-term interest rates, is 4.7 percent unemployment by the end of the year, down from the current rate of 4.9 percent.
In December, the Fed raised its benchmark rate for the first time in nearly a decade. But wild swings in financial markets and a slowdown in global economic growth have since then raised concern that the U.S. economy might not be strong enough to handle another rate increase now.
Rate increases can weigh on stocks because they make borrowing more expensive, and that has the potential to slow economic activity.
Jim O'Sullivan, chief U.S. economist with High Frequency Economics, said in a note that Fed officials "do not appear to be in a rush" to hike rates, citing their continued focus on global economic and financial conditions. He said the Fed is also unlikely to tighten policy at its next policy meeting in April.
U.S. stocks rose after the Fed's announcement. As of 3:12 p.m. ET, the Dow Jones Industrial Average was up 75 points, or 0.4 percent, to 17,327. The S&P 500 rose 12 points, or 0.6 percent, to 2,028, and the Nasdaq climbed 36 points, or 0.8 percent, to 4,765.