WASHINGTON — The Federal Reserve signaled Wednesday that it plans to keep a key interest rate at a record low because a broad range of U.S. economic measures remain subpar.
The Fed said it intends to keep its benchmark rate near zero as long as inflation remains under control, until it sees consistent gains in wage growth, long-term unemployment and other gauges of the job market.
The central bank retained language signaling its plans to keep short-term rates low “for a considerable time” after it ends its monthly bond purchases after its next meeting in October.
“In the Fed’s mind, the economy still has work to do, but it’s improving,” said Mike Arone, an investment strategist with State Street Global Advisors.
The yield on the 10-year Treasury note edged up to 2.62 percent from 2.59 percent late Tuesday.
In its statement, the Fed said it will make another $10 billion cut in the pace of its Treasury and mortgage bond purchases, which have been intended to keep long-term borrowing rates low.
It also clarified the process by which it will eventually unwind its low-rate policies. The Fed said it would first increase its key short-term rate before it stops reinvesting its bond holdings.
On Wednesday, the central bank also issued updated forecasts for growth, inflation and interest rates. The median short-term rate supported by Fed policymakers at the end of 2015 is now 1.38 percent, up from 1.13 percent at its June meeting. This suggested pressure from some Fed officials for a faster rate increase than the Fed’s statement implied.
The Fed also expects slower growth this year and next than in its last projections in June. It predicts that the economy will grow about 2.1 percent this year, down from its June forecast of roughly 2.2 percent.
