The US Federal Reserve voted to leave interest rates on hold despite facing pressure from President Donald Trump to reduce borrowing costs.

The pause comes after three consecutive interest rate cuts and means the federal funds rate stands in a range of 4.25-4.5 per cent.

Although the decision was widely expected by investors, rate-setters have faced political pressure to lower rates since President Trump’s election victory.

“I think I know interest rates much better than they do, and I think I know them certainly much better than the one who’s primarily in charge of making that decision,” Trump said last week, suggesting rates should come down “a lot”.

But officials on the Federal Open Market Committee (FOMC), the body responsible for setting rates, said there was a strong case for keeping rates on hold.

“Recent indicators suggest that economic activity has continued to expand at a solid pace. The unemployment rate has stabilised at a low level in recent months, and labour market conditions remain solid. Inflation remains somewhat elevated,” it said in a statement.

Indeed, rate-setters removed a previous reference to inflation making “progress” from the policy statement, suggesting they are more worried about the persistence of price pressures.

Inflationary pressures remain elevated. The Fed’s preferred measure of price pressures, the core PCE index, stands at 2.8 per cent. New figures will be released on Friday.