Fed stands pat on interest rates, but hints at upcoming hike
WASHINGTON - The Federal Reserve is leaving interest rates unchanged just days before Americans choose a new president, but hints that it will likely raise rates at an upcoming meeting.
The Federal Open Market 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 Fed’s rate-setting panel said in a statement.
Analysts and financial markets anticipate a rate hike in December. The Fed had been expected to leave rates alone Wednesday, in part to avoid any perception of affecting next week’s vote in the presidential election.
“The Fed punts any interest rate move until the December meeting,” said Greg McBride, chief financial analyst with Bankrate.com, in a note. “With the election looming and uncertainty already gripping markets, the Fed needed to hold off in case there is a Brexit-like aftermath.”
The statement the Fed issued closely tracked its September statement, noting that the labor market has continued to strengthen and economic activity has picked up.
Ian Shepherdson, chief economist with Pantheon Macroeconomics, forecast further improvement in the job market and a rise in inflation in the weeks ahead, raising the odds of a rate-hike in December.