WASHINGTON, July 29 (Reuters) - - U.S. labor costs rose steadily in the second quarter, pointing to still-moderate wage inflation, which could see the Federal Reserve keeping interest rates unchanged for a while.


The Employment Cost Index, the broadest measure of labor costs, increased 0.6 percent after a similar gain in the first quarter, the Labor Department said on Friday.


Economists polled by Reuters had forecast the ECI rising 0.6 percent in the last quarter.


In the 12 months through June, labor costs rose 2.3 percent, well below the 3 percent threshold that economists say is needed to bring inflation closer to the Federal Reserve's 2 percent inflation target.


Labor costs increased 1.9 percent in the year to March.


The Fed on Wednesday left its benchmark overnight interest rate unchanged, nodding to persistently low inflation. The Fed hiked rates in December for the first time in nearly a decade.

Wage growth has been frustratingly slow, but there is cautious optimism it could start picking as the labor market tightens.

The ECI is widely viewed by policymakers and economists as one of the better measures of labor market slack. It is also considered a better predictor of core inflation.

Wages and salaries, which account for 70 percent of employment costs, rose 0.6 percent in the second quarter.

They increased 0.7 percent in the first quarter. Wages and salaries were up 2.5 percent in the 12 months through June.

They rose 2.0 percent in the year to March. Benefits for all workers increased 0.5 percent in the April-June quarter after rising by the same margin in the first quarter.

(Reporting By Lucia Mutikani; Editing by Andrea Ricci)