"In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy," Fed Chair Jerome Powell said, adding that "We're in a difficult situation."

WASHINGTON, March 18 (Xinhua) -- The U.S. Federal Reserve on Wednesday voted 11-1 to keep the benchmark federal funds rate at 3.5-3.75 percent, despite continued high inflation and uncertainty over the U.S.-Israeli war on Iran.

Although the rate decision was in line with market expectations, Fed officials signaled they still expect a few rate cuts ahead.

The central bank's "dot plot," which reflects each Federal Open Market Committee (FOMC) member's projection for the benchmark short-term interest rate, points to one rate cut this year and another in 2027.

On the other hand, seven out of the 19 FOMC officials indicated they expected interest rates to stay unchanged this year, up from six in December.

Fed Chair Jerome Powell downplayed how informative these forecasts are at the moment, repeatedly saying that it was too early to tell how the ongoing war in Iran would affect inflation and unemployment.

"In the near term, higher energy prices will push up overall inflation, but it is too soon to know the scope and duration of the potential effects on the economy," he said, adding that "We're in a difficult situation."

With the war going on for nearly three weeks, crude oil prices are hovering around 100 U.S. dollars per barrel. The Brent crude oil benchmark hit nearly 110 dollars per barrel on Wednesday after strikes hit Iran's gas and oil facilities.

Markets, businesses and consumers have been further rattled by Iran's attempted closure of the Strait of Hormuz, a narrow Gulf chokepoint through which about 20 percent of the world's oil and gas normally passes, as Tehran uses the route as leverage in its confrontation with the United States and Israel -- a move that could further disrupt global energy supplies and send prices higher.

According to the American Automobile Association, the average price in the United States for a gallon of regular gasoline jumped about 30 percent from a month ago to 3.84 dollars on Wednesday.

Meanwhile, markets have been volatile over the past few days, with the Dow Jones Industrial Average falling 1.6 percent on Wednesday, the S&P 500 down 1.4 percent and the Nasdaq Composite Index off 1.5 percent.

Economists backed the Fed's cautious approach. Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, told Xinhua: "Definitely, the policy rate should not be lowered. Inflation is still too high."

Similarly, Dean Baker, co-founder of the Center for Economic and Policy Research, said the Fed has "no choice but to hold ... We know higher energy prices will be a source of inflationary pressures. I can't see the Fed doing anything other than hold."