At the end of a two-day meeting, the Federal Open Market Committee showed the strongest division over policy since December 2014, with three of the 10 voting members arguing for a rate rise now.
Another central bank struggling with too-low inflation is the Reserve Bank of New Zealand and it renewed a pledge to lower rates again on Thursday even as much of the domestic economy is growing briskly.
"The committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives", the statement said. The Fed sees two increases next year, down from three projected in June.
"On the back of the Fed's inaction last night, the markets have taken quite some respite from that", Dafydd Davies, partner at Charles Hanover Investments said, noting mining stocks were pushed "to the forefront of the FTSE 100".
Earlier, the Bank of Japan overhauled its monetary policy to target interest rates.
Also, the Turkish lira largely benefited from the Fed and BoJ decisions as the USA dollar versus Turkish lira rate, which was at 2.9768 the previous day at market close of markets at 5:30 p.m. local time (2:30 GMT), tumbled to 2.9530 at opening of markets at 9:30 a.m. (6:30 GMT), or down 0.8 percent.
In commodity markets, gold traded down 0.2 per cent at US$1,333.20 an ounce, having climbed 1.7 per cent as the U.S. dollar declined on Wednesday. Major indices jumped with the gains rising in the last half hour of trading to 6am Sydney time.
The Dow Jones industrial average was up 56.67 points, or 0.31 per cent, to 18,186.63, the S&P 500 gained 7.96 points, or 0.37 per cent, to 2,147.72 and the Nasdaq Composite added 19.90 points, or 0.38 per cent, to 5,261.25.
The consumer price index rose 0.2 percent in August, with core prices up 0.3 percent.
The Australian dollar has climbed to a two-week high against the green back, as the US dollar weakened on the US Fed's decision.
Singapore however ended marginally lower after gaining almost 1% earlier in the session, ahead of August inflation data due on Friday.
Australian shares rose 0.9 per cent, while South Korea's KOSPI advanced one per cent.
"The highly-unusual 7-3 FOMC vote speaks to the complexity facing the Fed operating in a prolonged period of highly unbalanced policy mix", Allianz's Mohamed El-Erian said.
FED WATCH: The Federal Reserve kept its key interest rate unchanged and signaled it is likely to rise later this year.
In the USA bond market, yields fell as the Fed lowered its projection for interest rate levels needed to support expansion.
While Tokyo was on holiday on Thursday, stocks closed up 1.9 per cent on Wednesday after the BOJ's shift to targetting a positive yield curve, a move that was considered bullish for banks, insurers and pension funds.
The Fed in December signalled that four rate increases were likely this year, but that was scaled back in March due to a global growth slowdown, financial market volatility and concerns about tepid United States inflation.
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