The US Federal Reserve saw economic conditions "approaching" the point of being able to weather an increase in near-zero interest rates at July's policy meeting, a Fed report has said.
Fed officials saw slack in the job market and worried about China's economic slowdown as they considered raising borrowing costs for the first time in more than nine years, according to the minutes of the 28-29 July Federal Open Market Committee meeting.
"Most judged that the conditions for policy firming had not yet been achieved, but they noted that conditions were approaching that point," the minutes said.
Participants at the meeting generally agreed that job market conditions had improved, but "several" officials noted that "some noticeable margins of slack remained, citing as evidence the high number of workers not actively searching for jobs but available and interested in work as well as the high share of employees working part time for economic reasons."
The slowdown in China, the world's second-biggest economy, and a bout of financial turmoil as Chinese equities tumbled, also troubled Fed policy makers, the minutes showed.
"While the recent Chinese stock market decline seemed to have had limited implications to date for the growth outlook in China, several participants noted that a material slowdown in Chinese economic activity could pose risks to the US economic outlook," the minutes said.
The FOMC, as widely expected, held unchanged at the July meeting the Fed's benchmark federal funds rate at the zero level, where it has been pegged since late 2008 to help support the US economy's recovery from the severe 2008-2009 recession.
A series of mixed US economic indicators since the meeting has clouded the outlook for a rate hike.
Fed Chair Janet Yellen has said it was on track for sometime this year.
Some experts say a September rate hike is likely because the economy overall looks strong enough, while others bet the Fed will want to wait to have more data for liftoff.