Fed Leaves Rates Unchanged

With financial markets anticipating a rate hike before the end of the year, the Federal Reserve late Wednesday held interest rates steady again, while continuing to acknowledge that the case for a move is getting stronger.

Federal Open Market Committee officials, however, made no direct nod to a coming rate increase at the December meeting, a move that the market is strongly anticipating. In fact, the dovish FOMC majority gained a vote, CNBC reported.

In lieu of a rate hike, the group released a statement acknowledging economic improvements that aren’t yet enough to generate a policy tightening.

“The committee judges that the case for an increase in the federal funds rate has continued to strengthen but decided, for the time being, to wait for some further evidence of continued progress toward its objectives,” the FOMC said in a statement released at the conclusion of its two-day meeting.

Similar language appeared in the September statement, though that statement said the case “has strengthened” rather than this month’s “continued to strengthen” phrasing. The word “some” also was missing in September.

“They punted because of the growing uncertainty around the US election,” said Michael Arone, chief investment strategist at State Street Global Advisors. “The Fed wanted to take a bit of a backseat, and this fairly benign change in their statement reflects their conservative nature.”

Heading into the meeting, traders had been pricing almost no chance of a move this week, but a 73.6% possibility of a December hike. The Fed last hiked its rate target in December 2015, the first such move since June 2006.

Though the market anticipates a December hike, the committee believes the Fed will be on hold for further moves well into 2017.