The U.S. Federal Reserve kept its prime interest rate at a 23-year high on Wednesday.

The decision raises questions on whether the Bank of Canada will alter plans for an anticipated reduction of its key overnight rate in June.

The Fed’s stance also has implications for Canadian commercial real estate investors who are seeking to deploy capital in the U.S. Canadian banks with operations in the U.S. will also be affected.

The Federal Open Market Committee held the federal funds rate in a target range of 5.25% to 5.5%, as widely expected, and gave no signal that it plans to lower it any time soon. The FOMC includes presidents of U.S. reserve banks and Fed chair Jerome Powell.

Like the BoC’s key overnight rate, the federal funds rate has been in a holding pattern for several months. The Fed last raised interest rates in July 2023.

Like the Bank of Canada, the Fed wants inflation to get closer to 2% before reducing interest rates.

“In recent months, there has been a lack of further progress towards the committee’s 2% inflation objective,” said the Fed in a statement.

“The committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2%.”

Fed officials added that the economy “has continued to expand at a solid pace” and “job gains have remained strong.”

Many economists have predicted that the Canadian central bank will begin to cut rates in June after Tiff Macklem, the BoC’s governor, adopted a softer stance on them. The BoC closely monitors Fed practices.

The question now is whether the BoC will begin to cut rates before the Fed.

Although U.S. inflation has decreased over the previous year, American policymakers recognized that it is still high and that recent months have seen a noticeable lack of additional advancement toward the Fed’s objective.

Expectations for interest rate cuts, for 2024 and 2025, have dropped significantly since the last FOMC meeting, with just one 25-basis point cut priced in for 2024.

In its latest decision, the BoC held its key overnight interest rate at 5%, marking the sixth consecutive time that it has done so. The six straight holds follow 10 consecutive hikes since March 2022.

In recent days, a number of analysts have said that they do not expect U.S. inflation to derail the BoC’s interest-rate-reduction plan.