The decision – formally opposed by one Fed policymaker – is the last by the central bank before president-elect Donald Trump takes office. He won the election in November promising to bring down both prices and interest rates.
But analysts have warned that his policies, including plans to impose widespread import tariffs, could pose challenges to those goals.
The Fed’s announcement comes a day before the Bank of England is due to make its latest interest rates decision in the UK, where price inflation has also recently ticked higher.
It is widely expected to hold its benchmark rate steady at 4.75%.
Monica George Michail, associate economist at the National Institute of Economic and Social Research, said the Bank of England was facing rates of wage growth and price increases for services that are hotter than in the US.
Some of the government’s plans, which include hikes to the minimum wage, will also put pressure on inflation, she added.
“The Bank of England is trying to remain cautious,” she said.
But she warned that inflation risks are present in the US as well, pointing to Mr Trump’s tariff plans.
Mr Ryding said he thought the Bank of England – which unlike the Fed, does not have to consider unemployment as part of its mandate – was more clearly responding to the reality of the situation in front of it.
“The Bank [of England] is being more of a prudent central bank than the Fed is right now,” he said.