Fed keeps rates unchanged; more officials ask for a rate hike

 The Federal Reserve, as mostly expected, left interest rate unchanged at 0.25 - 0.50%. According to the FOMC “the case for an increase in the federal funds rate has strengthened" but they decided to wait for more information. Three members dissented from the majority and asked for a rate hike.

Unchanged but…

The Fed kept rates unchanged but move closer toward a rate hike. Regrading the economic outlook the statement mentioned that growth “picked up from the modest pace seen in the first half of this year.”

“The Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent. The Committee judges that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. The stance of monetary policy remains accommodative, thereby supporting further improvement in labor market conditions and a return to 2 percent inflation,” said the Fed in their statement.

An important change from previous meetings was the fact that three FOMC voters asked for a rate hike (compared to only 1 vote from the July meeting). Loretta Mester and Eric Rosengren, joined Esther George and “preferred at this meeting to raise the target range for the federal funds rate to 1/2 to 3/4 percent.”

Regarding the “dot plot”, projections showed that three officials see no rate hike during 2016 and that the median official points toward two hikes during 2017.

Now traders await Janet Yellen press conference that will start at 18:30 GMT.

The next FOMC meeting will be November 2 (1 week before US presidential elections) and then December 14.