The Federal Reserve expressed growing confidence in the health of the U.S. economy Wednesday but still declined to raise interest rates, declaring that the case for an increase “has strengthened” but that it would wait “for further evidence of continued progress” toward higher growth and faster inflation.

The decision suggests the Fed believes the U.S. economy has sailed safely through headwinds that worried officials earlier this year, including possible damage from Great Britain’s vote to exit the European Union. It appears to be a step toward raising rates soon, though vague on the question of when that increase might come this year.

America’s job market “has continued to strengthen,” Fed officials said in a written statement, “and the growth of economic activity has picked up from the modest pace seen in the first half of the year.” It added: “Near-term risks to the economy appear roughly balanced.”

Highlighting a growing split on the Federal Open Market Committee, three regional Fed presidents dissented from the decision: Esther George of the Kansas City Fed, Loretta Mester of the Cleveland Fed and Eric Rosengren of the Boston Fed. All of them favored an immediate move to raise rates. In July, only George broke from the decision to hold rates just above zero.

Fed officials also indicated that they still expect interest rates to rise by year’s end, although not as quickly as they had previously expected. They now expect rates to hit 1.1 percent at the end of 2017, down from a forecast of 1.6 percent in June. The outlook for the end of 2018 also fell by a half-point, from 2.4 percent to 1.9 percent.

Markets and Fed-watching economists had largely anticipated Wednesday’s move, after Fed Chair Janet Yellen and other top officials at the nation’s central bank sent strong hints in recent speeches that rates were unlikely to budge this month.

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The decision, at the end of a two-day meeting in Washington, leaves open the question of whether the committee might raise rates when it next meets in October, shortly before the U.S. presidential election. Many Fed-watchers had expected no rate increases until November.

It appears likely to draw fire on the campaign trail from Republican presidential nominee Donald Trump, who has accused the Fed of keeping rates artificially low to boost President Obama and Democratic nominee Hillary Clinton.

Board members also issued updated forecasts for growth and inflation Wednesday, and they were little changed from June. The median forecaster on the board now expects the U.S. economy to grow 1.8 percent this year, down from 2 percent in June, and the unemployment rate to finish the year at 4.8 percent.

Inflation for the year is now expected to register at 1.3 percent, down slightly from June’s projections and still well short of the Fed’s 2 percent inflation target. Core inflation, which excludes more volatile prices such as energy, is expected to hit 1.7 percent for this year.

Other central banks are moving to ease monetary policy, not tighten it, in the face of weak domestic and global growth. Earlier in the day, the Bank of Japan announced new steps in an attempt to stoke inflation and growth.


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