Washington | The Federal Reserve on Wednesday (Thursday AEST) left interest rates unchanged for the first time in more than a year, but said new economic projections suggested the US economy was stronger than previously expected and that borrowing costs would probably have to rise by another half a percentage point.

Fed chairman Jerome Powell said it was “prudent” to pause this time, but that the bank’s next meeting in July would be “live”, with most members of the Federal Open Market Committee expecting “some further rate increases will be appropriate this year” to bring inflation down to 2 per cent from a headline rate of 4 per cent now.