The Federal Reserve said it believes the recent slowdown in US growth is likely to prove temporary as it stayed on course for a further increase in short-term interest rates as soon as June.

The US central bank kept its target range for the federal funds rate at 0.75 per cent to 1 per cent following its latest two-day meeting. In a statement, policymakers led by chair Janet Yellen acknowledged that household spending growth had grown “only modestly” lately, but they emphasised that the “fundamentals” behind consumption growth remained solid.

US economic growth slowed to an annual rate of just 0.7 per cent in the opening quarter of the year, and core inflation has subsided marginally even as the jobs market continues to progress towards full employment. The Fed lifted rates by a quarter point at its March 15 meeting and signalled that it expects a total of two more increases in 2017.