The U.S. economy and job market continue to strengthen, the Federal Reserve said on Wednesday, July 29, leaving the door open for a possible interest rate hike when central bank policymakers next meet in September, according to Reuters.

Following their latest two-day policy meeting, Fed officials said they felt the economy had overcome a first-quarter slowdown and was "expanding moderately" despite a downturn in the energy sector and headwinds from overseas.

They nodded in particular to the "solid job gains" seen in recent months.

"On balance, a range of labor market indicators suggest that underutilization of labor resources has diminished since early this year," the Fed said in a policy statement that kept rates unchanged.

The Fed also said it now only needs to see "some" more improvement in the labor market, a qualification that analysts said strongly suggested it believes the recent solid U.S. job gains will continue.

"They slightly lowered the hurdle for a rate hike by adding the word 'some' to their conditions required for further improvement in the labor market," said Shyam Rajan, head of U.S. interest rate strategy at Bank of America Merrill Lynch.

Although the Fed may have ramped up expectations of a rate hike in September, it didn't give a clear signal of its plans, Reuters says. Besides the additional improvement on the labor front, it said it also needed to be more confident that low inflation will rise to the 2 percent medium-term target.

U.S. Treasury prices were largely unchanged after the Fed statement. U.S. stocks rose and the dollar was stronger against a basket of currencies.

The Fed's policy statement also retained language saying that risks are "nearly balanced," suggesting it is still more concerned about a new economic downturn rather than of rapidly rising inflation.