The Federal Reserve held interest rates steady Wednesday but hinted that it is nearer to easing monetary policy as it cited "some further" progress on inflation and Fed Chair Jerome Powell told reporters a September cut "could be on the table."

Fed officials voted to keep their benchmark interest rate in a range of 5.25%-5.50%, a 23-year high. The decision was unanimous.

The fed funds rate has been in this range since last July as part of the Fed’s aggressive campaign to tamp down inflation that ballooned during the pandemic.

But Fed officials hinted in a policy statement that they are inching closer to the confidence needed to lower rates as inflation continues to cool and the job market slows, making a cut at its next meeting on Sept. 17-18 increasingly likely.

Powell also used a press conference Wednesday afternoon to signal cuts could be getting closer.

While Powell told reporters the Fed has "made no decisions about future meetings and that includes the September meeting," he also acknowledged that "the broad sense of the committee is that the economy is moving closer to the point at which it will be appropriate to reduce our policy rate."

If central bank officials were to see inflation falling or in line with expectations, growth remaining reasonably strong and the labor market consistent with current conditions, Powell said "I think a rate cut could be on the table in September."

But he noted that if inflation proved to be stickier than anticipated, the Fed would weigh that along with other factors.

"It’s not going to be just any one thing," he added.

The hints dropped by the Fed's Federal Open Market Committee on Wednesday came in the slight changes it made to a policy statement.

When it stated that "in recent months there has been some further progress towards the Committee’s 2% inflation objective," that marked a change from the "modest further progress" cited in a prior statement.

Another sign in statement came when policymakers noted that the risks to both sides of their dual mandate — price stability and full employment — "continue to move into better balance."

That was a change from "moved toward better balance."

Officials did maintain some cautious language in their policy statement, stating that “the Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2 percent.”

They also said characterized inflation as "somewhat" elevated even as they reiterated it had eased over the past year.

Read more: What the Fed rate decision means for bank accounts, CDs, loans, and credit cards

The language changes made to the statement Wednesday come after some key Fed officials emphasized in the weeks leading up to Wednesday's meeting that they were getting closer to having confidence inflation was sustainably dropping to their 2% goal.

That confidence had slipped somewhat following hotter-than-expected inflation readings in the first quarter. But three straight months of better data have restored some optimism.

The latest reassurance came last Friday when a new reading of the Fed’s preferred inflation gauge — the core Personal Consumption Expenditures (PCE) index — showed its lowest annual gain in more than three years.

The 2.6% annual increase in the month of June was the same level as May and down from 2.8% in April. On a three-month annualized rate, core PCE dropped back to 2.3% from 2.9%.

Another inflation measure, the Consumer Price Index (CPI), has also shown progress.

On a "core" basis — which excludes volatile food and energy prices the Fed can’t control — CPI rose 3.3% year over year in the month of June. That was down from 3.4% in May and 3.6% in April.

Fed officials have also been making it clear they are paying more attention to a slowing job market, another sign that cuts were likely nearing.

The unemployment rate has ticked up for two consecutive months to 4.1% — above where some Fed officials predicted the rate would be at the end of this year.

Fed officials in their policy statement released Wednesday noted that job gains have moderated. While the unemployment rate has moved higher, they said, it remains "low."

Most Fed watchers in the runup to Wednesday’s meeting said the central bank still needed just a bit more time to be sure about cuts, while also preparing the markets for the significant action to come.

In fact, some Fed officials have indicated they need more than one quarter’s worth of good data to know for sure that inflation is traveling in the right direction. They may want to see what the July and August readings show first.

But Powell told reporters that at this week's FOMC meeting "there was a real discussion" about what the case would be for cutting now. A "strong majority" supported keeping rates steady but "it was a discussion that we had today certainly."

Read more: Fed predictions for 2024: What experts say about the possibility of a rate cut

A September rate cut could cause the central bank to face political criticism from both sides of the aisle in Washington.

Lawmakers from both parties have signaled they would criticize the Fed if a decision made at the last meeting before Election Day didn't go their way.

If Powell and his colleagues choose to keep rates at a 23-year high, a growing chorus of Democratic critics calling for cuts may reach a crescendo.

But if policymakers do indeed cut, Republicans from Donald Trump on down will be sure to cast the move as caving to election-year pressure.

In an interview with Bloomberg published earlier this month, the Republican nominee again reiterated that central bank officials should not ease monetary policy before the November election.

"It’s something that they know they shouldn’t be doing," Trump said.

Powell was asked Wednesday afternoon if the Fed could remain nonpolitical with a September rate cut.

"I absolutely do," he said.

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