WASHINGTON (REUTERS) - The Federal Reserve left interest rates unchanged on Wednesday but said near-term risks to the US economic outlook had diminished, opening the door to a resumption of monetary policy tightening this year.
The US central bank said the economy had expanded at a moderate rate and job gains were strong in June. It added that household spending also had been "growing strongly", and pointed to an increase in labour utilization.
While Fed policymakers said they continued to closely monitor inflation data and global economic and financial developments, they indicated less worry about possible shocks that could push the US economy off course.
"Near-term risks to the economic outlook have diminished,"the Fed's policy-setting committee said in its statement following a two-day meeting in which it left its benchmark overnight interest rate in a range of 0.25 per cent to 0.50 per cent.
It noted, however, that inflation expectations were on balance little changed in recent months.
The Fed has held steady on rates since December, when it raised them for the first time in nearly a decade and signalled another four rate increases were in the offing for 2016.
That was scaled back to two hikes this year after Fed policymakers issued new projections in which they also lowered their longer-term growth estimates for the US economy.
Despite a strong rebound in job growth last month and an economy near full employment, most Fed policymakers had urged caution in raising rates until there was concrete progress in moving inflation toward the Fed's 2 percent target.
The Fed's preferred inflation rate currently stands at 1.6 per cent and has been below target for more than four years.
A global economic slowdown, financial market volatility and uncertainty over the impact of Britain's June vote to leave the European Union have repeatedly forced the Fed to delay another rate increase.
The US economy, however, has suffered little initial impact from the so-called 'Brexit' vote. A string of better-than-expected economic data recently as well as an easing in financial conditions also have calmed nerves.
There are three more Fed policy meetings left this year - in September, November and December. A rate hike in November is generally seen as unlikely because that meeting would occur a week before the US presidential election.
Fed officials will now turn their attention to this Friday's first initial estimate of second-quarter GDP, which is expected to show a healthy rebound from the previous quarter.
Kansas City Fed President Esther George was the only policymaker to dissent at this week's meeting. She has favoured raising rates at three of the last four meetings.