WASHINGTON  — The Federal Reserve held its key interest rate steady Wednesday and slightly downgraded its economic outlook but downplayed recent weakness, firmly leaving the door open to a June hike.

In a statement after a two-day meeting, the Fed’s policymaking committee largely dismissed recent slumps in both economic and job growth as temporary blips.  It emphasized the generally robust labor market, saying “it has continued to strengthen even as growth in economic activity slowed.”

Although job growth fell to 98,000 in March from a 200,000-plus pace the prior two months, the Fed statement said “job gains were solid, on average, in recent months, and the unemployment rate has declined.”

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It said it “views the slowing in (economic) growth during the first quarter as likely to be transitory, ” a  nod to longstanding challenges measuring economic gains early in the year.

Although the Fed acknowledged that consumer spending “rose only modestly,” it added that the “fundamentals underpinning” consumption “remained solid.” And it upgraded its appraisal of business investment, saying it has “firmed.”

The statement also noted that a core measure of inflation that excludes food and energy costs fell in March, but added that annual inflation “has been running close to” the Fed’s 2% target.

In sum, the Fed took pains to minimize some recent bumps in the economy's course, seemingly priming investors for another rate increase soon. Before the meeting, Fed fund futures reckoned there’s a 67% chance of a rate hike in June, down from 72% a week ago.

The Fed has lifted its benchmark short-term interest rate twice since December – by a quarter percentage point each time -- after just one such hike in the previous nine years.  The central bank has signaled two more rate increases are likely this year. Fed officials have noted the economy and labor market generally have improved, inflation was picking up until a recent retreat and earlier headwinds to growth such as low oil prices and China’s economic troubles have faded. Also, the recent French election put the centrist candidate in a good position to win in the final round, easing market fears over the ascendance of the far right anti-globalism candidate.

The Fed’s statement reiterated it expects to nudge up rates “gradually” and that risks to its economic outlook “appear roughly balanced.”

The U.S. economy grew a meager 0.7% at an annual rate in the first quarter. But some Fed officials have portrayed the slump as transitory. Economists have noted the government has tended to report unusually sluggish growth early in the year, partly because it has struggled to make adequate seasonal adjustments.

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Also, consumers reined in their spending the first three months of the year after driving the economy in 2016, but that was largely a byproduct of warm winter weather that suppressed heating demand.

And the Fed’s preferred measure of annual inflation in March fell to 1.8% from 2.1%, while the core reading slipped to 1.6% from 1.8% -- below the Fed’s 2% target. But Jim O’Sullivan, chief U.S. economist of High Frequency Economics, attributes the drop in the core measure to an unusual decline in the price of wireless services.

Similarly, March's feeble payroll growth has been traced to cold and stormy weather in some parts of the country and an expected decline after warm weather pulled forward hiring to the first two months a year. Employment gains averaged 178,000 in the first quarter, in line with last year’s performance.

Economists expect the Labor Department to report Friday that employers added a solid 190,000 jobs in April. A second straight disappointing performance, combined with the anemic first-quarter economic growth, could lower the odds of a June rate hike.

The Fed’s statement did not modify its long-standing vow to reinvest payments from its mortgage-backed securities and roll over maturing Treasury bonds, effectively maintaining the $4.5 trillion portfolio it amassed during and after the financial crisis and recession.

Minutes of the Fed’s March meeting showed officials said they likely would begin winding down the balance sheet later this year, a positive milestone for the recovery but a step that’s likely to push up long-term interest rates and rattle markets.

Michael Gapen, Barclays’ chief U.S. economist, says the Fed likely doesn’t want to formalize that plan in a statement until it’s convinced the economy’s first quarter slump was a blip and it can marshal a consensus for how to shrink the holdings. Fed officials, for example, have disagreed about whether they should gradually phase out the reinvestments to reduce risks or stop them immediately to convey a simpler message to the public.