The United States' central bank held off on a rate hike at its bi-monthly monetary policy meeting in Washington on Wednesday, but three officials opposed the decision - the most dissents since December 2014.

In a press conference after the meeting, Fed chair Janet Yellen said policy was in support of "statutory goals for maximum employment and price stability," and that the Fed expected the economy to expand "at a moderate pace for the next few years."

Federal Open Market Committee (FOMC) officials, the key body that decides monetary policy for the US dollar, concluded that economic growth is improving after an anemic first half of the year, job gains are expected to continue, and inflation remains low. But in a statement after their Wednesday meeting, the majority of FOMC officials chose "to wait for further evidence of continued progress" rather than raise the bank rate off the floor now.

Yellen said that she expected inflation to rise to its target 2 percent level over the next two or three years, in the context of remarks that suggest the Fed may be unlikely to raise rates much until and unless that inflation rate is reached.

"Although the unemployment rate is little changed in recent months, job gains have been solid, on average. Household spending has been growing strongly but business fixed investment has remained soft," the Fed said in a statement.

"Inflation has continued to run below the Committee's two percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports... most survey-based measures of longer-term inflation expectations are little changed," the statement continued.

Differences of opinion

Fed Chair Janet Yellen was among the seven who voted to wait. But Kansas City Fed President Esther George, who also dissented after the July meeting, was joined this time by Cleveland Fed President Loretta Mester and Boston Fed President Eric Rosengren in calling for an increase to the short-term federal funds rate.

That rate, which determines what banks charge each other for loans, is currently in the range of 0.25 percent to 0.5 percent. Until last December, the rate had been near zero.

Fed committee members will meet again in November and December, with the markets expecting at least one rate hike before 2017.

Dampened expectations

Policymakers still expect to raise their key short-term interest rate once this year, possibly at their meeting in December. However, their overall outlook is more cautious than the last time they issued interest rate projections three months ago. They foresee only two rate hikes next year and two in 2018, down from three each year.

Fed officials also marked down their estimate of the long-run level of short-term rates to 2.875 percent from 3 percent in June. That is down sharply from 3.5 percent in December, a sign the Fed expects that growth will remain sluggish and inflation low for the foreseeable future. In that environment, fewer rate increases would be needed.

The projections reflect the forecasts of all 17 participants in the Fed's deliberations. Only ten of those members actually vote on the Fed's decisions.

nz / uhe (AP, US Federal Reserve website)