WASHINGTON — The Federal Reserve left its benchmark interest rate unchanged Wednesday even as it said that labor market conditions were improving and inflation had picked up.
As expected, the Fed held steady on interest rates after a two-day meeting of its policymaking committee, noting that domestic economic growth had slowed. But the central bank appears on course to increase rates later this year.
“Labor market conditions have improved further even as growth in economic activity appears to have slowed,” the Federal Open Market Committee said in its statement after the meeting.
When the Fed raised its benchmark interest rate in December, for the first time since the financial crisis, it said it was beginning a march toward higher rates. But the central bank has yet to take a second step.
The April meeting represents the Fed’s third consecutive decision to stay put. The benchmark rate remains in a range of 0.25 percent to 0.5 percent, and borrowing costs for businesses and consumers have barely climbed.
This time, the Fed pointed to several areas of weakness in the domestic economy. It said household spending had “moderated,” and business investment and export activity remained “soft.”
But those sour notes were tempered. The Fed noted that household income continued to rise and that consumer sentiment remained positive. Housing construction is increasing and, most important, the statement underlined continued strength of job creation.
“A range of recent indicators, including strong job gains, points to additional strengthening of the labor market,” the statement said.
The statement also suggested that the Fed’s concerns about global economic weakness had diminished. The Fed’s last statement, in March, described global conditions as a headwind for domestic growth. The April statement said merely that the Fed continued to monitor global economic and financial developments.
The statement also said that “inflation picked up in recent months,” although it noted that inflation remained below the Fed’s 2 percent annual target, and inflation expectations remained weak.