Washington ? Federal Reserve policy-makers left a key interest rate at a 46-year low on Tuesday but dropped their promise to be patient before they start raising rates.

Many economists saw the statement by Federal Reserve Chairman Alan Greenspan and his colleagues as a strong signal that rates would start rising this summer.

Most analysts said they believed the Fed’s first rate increase in more than four years would occur in August, although a minority said it could come as early as the Fed’s next meeting in June.

“They are no longer signaling that they can stay on hold for a number of months,” said Lynn Reaser, of Banc of America Capital Management in St. Louis. “We will see an increase in interest rates sometime this summer.”

All analysts said that any actual Fed rate increases would depend on how the economic data comes out during the next few months, particularly in terms of jobs.

Wall Street, however, took comfort from the Fed’s statement that the upcoming rate increases were likely to be at a “measured” pace.

The Dow Jones industrial average, which had been down by about 30 points right before the Fed’s mid-afternoon announcement, rallied afterward, ending the day at 10,317.20, up 3.20 points.

Investors were heartened by the part of the Fed statement which said, “At this juncture, with inflation low and resource use slack, the committee believes that policy accommodation can be removed at a pace that is likely to be measured.”

For the arcane world of Fed-speak, economists saw that sentence as remarkably straightforward.

Trader Thomas Hyland, center left, signals over the shoulder of another trader in the Eurodollar Futures pit at the Chicago Mercantile Exchange. He made the signal Tuesday as the Federal Reserve announced that it would hold a main short-term interest at 1 percent, a 46-year low. The Dow Jones industrial average closed Tuesday at 10,317.20, up 3.20 points.

“That is about as clear a statement as Greenspan could have put out,” said David Wyss, chief economist at Standard & Poor’s in New York. “He said, ‘We are going to raise rates and we are going to do it slowly.”‘

The use of the word “measured” in describing future rate hikes marks the third change in this portion of the statement in recent months. From August through December, when weak job growth and worries about the remote risk of deflation predominated, the Fed promised to hold rates at a low level for “a considerable period.”

That phrase was changed in the January and March statements to a pledge to “be patient” before starting to raise rates.

The Fed’s latest statement struck a stronger tone about the economy, noting that economic output was continuing to expand at a “solid rate” and hiring “appears to have picked up.”

While noting that certain measures of inflation recently have risen, the Fed said that “long-term inflation expectations appear to have remained well contained.”

Analysts said the Fed was signaling that it was not yet worried about recent monthly inflation readings, which have come in higher than expected. Until recently the Fed was still concerned that inflation rates had fallen so low that there was a danger of deflation, or falling prices, something the country hasn’t seen since the Great Depression.

The Fed officially laid to rest its worries about deflation in Tuesday’s statement, saying it now perceived the risks to its goal of price stability as balanced. It maintained its view that the upside and downside risks to overall growth were balanced as well.

Those economists who expect an interest rate hike at the Aug. 10 meeting argued that the Fed would want to have at least one meeting where it moves its risk assessment from neutral and points to greater concerns about inflation. That way, the Fed can further prepare markets for upcoming rate hikes.

“The Fed is trying at all costs to avoid the mistakes of 1994,” said economist David Jones, the author of four books on the Greenspan Fed. In that year, the central bank began raising a key interest rate from what then was seen as an extremely low level, pushing the federal funds rate from 3 percent to 6 percent in just a year.

The shock waves triggered a series of financial catastrophes from Orange County, Calif., to the Mexican peso crisis.

The funds rate currently is at a 46-year low of 1 percent, where it has been since last June. Consumers and businesses have enjoyed a prolonged period of low borrowing costs as the Fed has battled to jump-start economic growth over the past three years.

The benchmark prime lending rate is currently at 4 percent, the lowest it has been since 1958.

Many economists said the Fed would want to see a pace of 150,000 to 200,000 jobs created every month for at least the next four months before they consider starting to raise interest rates, especially given that the country is in an election year, where President Bush is being attacked for a poor record on job creation.

Sung Won Sohn, chief economist at Wells Fargo in Minneapolis, said he saw August as the earliest that a Fed rate hike could occur. There is still a possibility that the Fed will remain on hold until after the election, he said.