The Federal Reserve on Wednesday left interest rates unchanged and signaled that a recent lack of progress on the inflation front calls for borrowing costs to remain higher for longer. In a press conference, Chair Jay Powell acknowledged that inflation has been higher than expected so far this year, adding that "restrictive monetary policy needs more time to do its job." Still, the Fed's next move is unlikely to be a rate hike, Powell said. Data showing stubborn inflation and higher wages have underpinned a shift in investors' rate expectations of late amid bets that policymakers will deliver fewer cuts this year than previously hoped. Powell noted that growth has remained solid, even as tighter financial conditions begin to dampen economic activity and reduce demand for new workers.

US employers had 8.49 million job openings at the end of March, a three-year low, according to figures released on Wednesday. But wage growth, which the Fed monitors as a gauge of inflationary pressure, picked up pace in the first quarter with the employment cost index increasing 1.2% from the previous quarter, the Labor Department said on Tuesday. The next monthly jobs report on Friday will offer another window into the health of the labor market. Economists have predicted a gain of 240,000 jobs in April after a March increase of 303,000. The unemployment rate is forecast to hold steady at 3.8%. Payroll processor ADP tallied 192,000 new private-sector jobs for the month, down from 208,000 in March but more than economists expected. Tom Porcelli, PGIM Fixed Income's Chief US Economist, discusses key takeaways from the Fed meeting in a new video.