U.S. Federal Reserve on Wednesday said the country's economy and job market continued to improve since June, a sign that the central bank remains on track to raise interest rate later this year. But it didn't provide a clear signal for the rate hike timetable.
After concluding the two-day policy meeting, Fed officials said in a statement that economic activity has been expanding moderately in recent months despite soft business investment and net exports.
Fed officials upgraded their assessment of the job market, saying the labor market continued to improve and the underutilization of labor resources has diminished since early this year. In the previous statement, the Fed believed that underutilization only "diminished somewhat."
In the statement, the Fed said the housing sector has shown additional improvement and dropped language saying energy prices appeared to have stabilized.
The statement may strengthen expectations of a rate hike at the Fed's September meeting or later. Market investors widely see September or even later as the most likely time for a Fed rate increase. The Fed has kept its benchmark short-term interest rate near zero since December 2008.
Fed Chairwoman Janet Yellen has said that officials expected to raise interest rate later this year. In the statement, the Fed didn't give a clear signal on the timing of its rate plan.
Instead, it said it wanted to see "some" further improvement in the labor market, and gain more confidence that low inflation will rise to its 2 percent medium-term target. In its previous statements, there was no modifier the "some," suggesting Fed officials might stand ready for action on the job market front.
Although the Fed is approaching to achieve the goal of maximum employment, one of the central bank's dual mandates, the inflation, the other mandate for the Fed, has remained below its 2 percent target for years.
The central bank said in its statement that inflation is expected to remain at low level in near term, but officials expected inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of earlier declines in energy and import prices dissipate.