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Fed on track for possible September rate hike amid improving economy, job market

Federal Reserve Chair Janet Yellen. The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, leaving the door open for a possible interest rate hike in September.

WASHINGTON – The U.S. economy and employment market continue to strengthen, the Federal Reserve said on Wednesday, leaving the doorway open for any possible interest rate hike when central bank policymakers next meet in September.

Following a two-day policy meeting, Fed officials said they felt the economy had overcome a first-quarter slowdown and was \”expanding moderately\” despite a downturn within the energy sector and headwinds from overseas.

The central bank nodded in particular to \”solid job gains\” in recent months.

\”On balance, a variety of labour market indicators suggest that underutilization of labor resources has diminished since early this season,\” the Fed said inside a policy statement that kept rates unchanged.

That language marks upgrading in its view of labour conditions since its June meeting, when it said labour slack had \”diminished somewhat.\”

The statement may strengthen expectations of a rate hike in the Fed\’s September meeting. The central bank has kept rates in a near-zero level since December 2008 included in its effort to spur the recovery in the 2007-2009 financial crisis.

Treasury yields fell with the 10-year dipping to two.28 percent from 2.29 per cent. After a modest run higher following the statement, the S&P 500 was slightly below where it had been before the release, up about 0.4 percent on the day.

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