WASHINGTON — Federal Reserve Chair Jerome Powell on Wednesday set the stage for the central bank’s first rate cut in four years, citing greater progress toward lower inflation as well as a cooler job market that no longer threatens to overheat the economy.

Still, the Fed kept its key interest rate unchanged at a 23-year high of 5.3%, despite calls from some economists and Democratic politicians to implement a cut Wednesday. Instead, Powell said that, if inflation continues to cool, “a rate cut could be on the table” when it meets next Sept. 17-18.

“We’re getting closer to the point at which it’ll be appropriate to reduce our policy rate,” Powell said, “but we’re not quite at that point.”

A rate cut by the Fed is unlikely to have much immediate impact because it is largely expected by financial markets.

Former President Donald Trump has said the Fed shouldn’t cut rates before the election. After September, the Fed’s next meeting is two days after the election in November.

In a statement Wednesday, the Fed said that “job gains have moderated” and acknowledged that the unemployment rate has risen. The Fed is required by Congress to pursue stable prices and maximum employment, and the statement said the central bank is “attentive to the risks” to both goals.

The focus on both inflation and employment is a major shift after several years of Fed officials focusing exclusively on combatting rising prices.

“They’re ready to cut, just as long as we don’t get an inflation suprise between now and September, which we won’t,” said Mark Zandi, chief economist at Moody’s Analytics. “Better late than never.”

Before the Fed’s decision, financial market traders had priced in 100% odds that the central bank will reduce its benchmark rate at its Sept. 17-18 meeting, according to futures markets.

The Fed typically seeks to avoid surprising investors with its rate decisions.

Stocks added a bit to earlier gains and Treasury yields eased after the Federal Reserve held its main interest rate at a two-decade high but gave some indication that an easing may soon be on the way. The S&P 500 ended Wednesday up 1.6%.

The Fed is seeking to strike a delicate balance: It wants to keep rates high enough for long enough to quell inflation, which has fallen to 2.5% from a peak two years ago of 7.1%, according to its preferred measure. But it also wants to avoid keeping borrowing costs so high that it triggers a recession. So far, it is on track for a so-called “soft landing,” in which inflation falls to 2% without a recession.

Yet with the unemployment rate ticking higher for three months in a row, some economists have raised concerns that the Fed should have cut rates Wednesday or should cut them more quickly later this year.

“The finish line is in sight and it would be tragic for the Fed to stumble and fall, with one-tenth of a mile left in the marathon, which is what I think they would be doing if they don’t start cutting,” Bharat Ramamurti, an advisor at the American Economic Liberties Project and former economist in the Biden White House, said on a call with reporters.

Also on Wednesday, three Democratic senators, led by Elizabeth Warren from Massachusetts, urged Powell in a letter to cut rates. The letter charged that a failure to reduce borrowing costs soon would suggest the Fed is “giving in to bullying” and would itself be a political move.