Fed keeps rates steady for now

The board wants to see further economic gains and higher inflation,

WASHINGTON — The Federal Reserve appears on track to raise interest rates later this year but signaled Wednesday that it wants to see further economic gains and higher inflation before doing so.

A statement from the Fed after its latest policy meeting provided no timetable. Many analysts foresee the first hike in September, though Fed Chair Janet Yellen has stressed that any increase will be driven by the latest economic data.

The statement noted that the job market, housing and consumer spending have all improved. The Fed still expects inflation to rise gradually toward its 2 percent target.

Wednesday’s statement made only slight changes in the wording of the previous statement in June. The few modifications suggested a healthier economy.

Describing the job market, the Fed for the first time pointed to “solid” job gains and declining unemployment. The unemployment rate has reached a seven-year low of 5.3 percent.

In addition, the Fed said it needs to see only “some further” improvement in hiring, rather than the “further” improvement it said last time — a hint that the job market is nearing full health.

Michael Hanson, an economist at Bank of America Mer- rill Lynch, said the Fed’s more upbeat language about the job market suggests that policymakers are nearing the point where they will raise rates. He expects that to occur in September.

“They haven’t made up their minds, but ... we’re getting that much closer to satisfying their criteria” for a rate hike, Hanson said.

Yellen has stressed that when the Fed begins to raise rates, it will do so only gradually.

The idea is to avoid weakening an economy that’s still benefiting from low borrowing rates resulting from the Fed’s policies.

She has suggested that raising rates in small increments, followed by pauses, will let the Fed assess the effects of slightly higher borrowing costs.

The Fed has kept its key short-term rate at a record low near zero since 2008.

Once it raises it, other rates — for mortgages, auto loans and corporate borrowing — could rise, too.

“In my mind, the Fed is very comfortable with a slow, deliberate pace,” said Brian Bethune, an economics professor at Tufts University in Boston.