Federal Reserve hints at December interest rate increase, votes to keep status quo for now

From The Washington Post:

The Federal Reserve on Wednesday subtly hinted that it could be ready to raise its influential interest rate in December amid steady improvement in the job market and solid economic growth.

For now, however, the central bank’s top officials voted to keep rates unchanged following their two-day policy meeting in Washington.

In a carefully worded statement, the Fed left open the door for a hike before long. ”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 statement read.

The language is slightly stronger than the Fed’s previous statements on the timing of a rate hike. Most investors and analysts have already shifted their sights to December. Before Wednesday’s announcement, futures markets pointed to a roughly 75 percent chance of a hike at the Fed’s last meeting of the year.

“All the stars are aligned for a December Fed move,” Roberto Perli, an economist at Cornerstone Macro, wrote in a research note ahead of the meeting.

Wall Street appeared to shrug off the widely expected decision. Stock markets have traded in the red for most of the day and were little changed in the minutes after the Fed’s announcement. The blue-chip Dow Jones industrial average was down 57 points, or 0.3 percent, while the broader Standard & Poor’s 500-stock index had lost 17 points, or 0.8 percent. The tech-heavy Nasdaq had fallen 54 points, or about 1 percent.

Many expected the Fed would not risk upsetting financial markets by hiking rates Wednesday, less than a week before the presidential election, as such a move potentially could have turned the central bank into a political target in the final days …

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