WASHINGTON — The Federal Reserve said Wednesday that near-term risks to the U.S. economy have diminished, reviving the prospect that it will resume raising interest rates as soon as September.
The Fed noted that the U.S. job market has rebounded, with robust hiring in June after a deep slump in May. At the same time, the Fed said in a statement after its latest policy meeting that it plans to closely monitor global economic threats and financial developments to ensure that they don’t slow the economy.
The Fed seemed to be referring to Britain’s vote last month that poses risks to the global economy.
The central bank gave no specific timetable for when it might resume the rate hikes it began in December, when it raised its benchmark rate from a record low. But some analysts who had doubted that the Fed would be ready to raise rates as soon as September said Wednesday’s statement revived that possibility.
“The Fed is saying that near-term risks have diminished, so that certainly puts September back in play,” said Brian Bethune, a professor at Tufts University.
Bethune said he thought they would wait until December before raising rates but that September was possible if hiring remains strong and the global economy remains stable.
Greg McBride, chief financial analyst at Bankrate.com, noted that “the Fed gave a very upbeat assessment of the U.S. economy, which is the first step toward prepping markets for another rate hike.”
Some suggested that the Fed’s brighter outlook suggests that it’s become less concerned that a British exit from the EU would undermine the U.S. economy.
The statement signals that the Fed “does not think that Brexit will be a significant hindrance for the U.S. economy,” said Carl Tannenbaum, chief economist at Northern Trust.
Analysts said the next signal of the Fed’s thinking could come when Chair Janet Yellen speaks at a central bank conference in August in Jackson Hole, Wyo.
Stock averages posted a modest increase Wednesday after the statement was issued at 2 p.m. Eastern time, before drifting lower later in the afternoon. The yield on the 10-year Treasury note dipped from 1.53 percent to 1.51 percent.
The decision to leave its key rate unchanged in a range of 0.25 percent to 0.5 percent was approved on a 9-1 vote. Esther George, the president of the Fed’s Kansas City regional bank, dissented for the third time this year, arguing for an immediate quarter-point rate hike.
A few months ago, it was widely assumed that the Fed would have resumed raising rates by now. But that was before the U.S. government issued the bleak May jobs report and Britain’s vote last month to quit the EU triggered a brief investor panic.
Since then, though, a resurgent U.S. economy, the bounce-back in hiring and record highs for stocks have led many economists to predict a Fed move by December if not sooner.
In December, when the Fed raised its benchmark rate from a record low near zero, it laid out a timetable for rate hikes this year. But fears about China’s economy sent markets sinking and the Fed delayed further action.
