Fed officials see progress in fight against inflation

WASHINGTON — The Federal Reserve said Wednesday that greater progress was made in reducing inflation to its 2% target, a sign the central bank is moving closer to cutting its key interest rate for the first time in four years.

After its two-day meeting, the Fed also said "job gains have moderated" and the unemployment rate rose. Still, Fed policymakers chose to keep their key rate at a 23-year high of 5.3%.

Pay and benefits for U.S. workers grew more slowly in the April-June quarter than in the first three months of the year, the Labor Department said Wednesday, a trend that could keep price pressures in check and encourage the inflation-fighters at the Fed.Compensation as measured by the government's Employment Cost Index rose 0.9% in the second quarter, down from a 1.2% hike in the prior quarter.