Chairman Jerome Powell gave no indication officials were weighing an interest-rate cut despite pressure from the White House.
The central bank has faced other episodes of idiosyncratic price drops in recent years, such as one from a price war among cellphone network providers in 2017.
Fed policymakers gathered on April 30 and May 1 to assess the economic and financial conditions, and decide on monetary policy.
This rate is well below the Fed's 2 percent target.
That Fed's statement also focused on the less stellar aspects of recent economic growth figures, noting that "growth of household spending and business fixed investment slowed in the first quarter".
"Nothing of what the (Federal Open Market Committee) did today. should be read as a signal that a future change in policy is coming".
The Fed's chief underscored yesterday The Fed's strong commitment to its 2% yearly inflation goal expecting the inflation to rise eventually over time and if it is to persist below this target, The Fed is to address about it.
A strong GDP coupled with low inflation has been the main reason behind Kudlow's and others' calls for a rate cut.
Readings above 50 indicate expansion, while lower numbers indicate contraction on the 100-point scale.
"I see us on a good path for this year", he added.
"If the inflation were to run persistently below 2 percent or persistently above 2 percent that would be a concern for the committee and the committee would take that into account in making policy", he explained. "They want a rate cut and this was basically Powell saying, "sorry but we're not".
Interest rate futures also reversed direction, signaling a lower degree of confidence the next Fed move would be a rate cut, exactly the point Powell was driving at in a "stay-the-course" message, said analysts at Cornerstone Macro.
U.S. Treasury yields rose as investors continued to digest Powell's comments. "We of course will be watching very carefully to see that that is the case".
Last week, it was reported that the USA economy grew at a surprisingly strong 3.2% annual rate in the January-March quarter.
"Demand shortages were again evident in the Turkish manufacturing sector in April, while currency weakness led to inflationary pressures building again", said Andrew Harker, associate director of IHS Markit.
Trump repeatedly has criticized the central bank for keeping the rates high.
In his latest Twitter attack, Mr Trump had slammed the Fed for "incessantly" raising interest rates despite low inflation, and called on officials to cut the rate by a full percentage point.
Following weak leads from the United States, the Australian share market looks set to open lower this morning. In March, the central bank indicated that it likely was done with increases for the rest of this year.
"We suspect that some transitory factors may be at work", Powell said.
Stocks had been moving sideways right before the Fed's announcement.
Last year, the Fed raised rates four times and, as late as December last year, had anticipated further rises in borrowing costs this year. The central bank, however, changed its course this year.
USA crude was last off 27 cents at $63.32 a barrel while Brent slipped 33 cents to $71.86. -China trade developments and economic data.