Bloomberg (07/30/14) Jeff Kearns

There is slack in the labor market even though the economy is improving, according to the U.S. Federal Reserve. “A range of labor-market indicators suggests that there remains significant underutilization of labor resources,” the Federal Open Market Committee said Wednesday in a statement, eliminating language saying that unemployment is “elevated.” Still, the Fed continued to taper its monthly asset purchases. The Fed also said inflation has risen nearer to its goal.

Fed chairman Janet Yellen testified this month that while her view of the economy has turned “more positive,” she is concerned about signs of labor-market slack. “We need to be careful to make sure that the economy is on a solid trajectory before we consider raising interest rates,” she said. “There are mixed signals.”