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Fed keep rates on hold. Muted market reaction

Summary:

  • Fed funds rate kept at 1.0-1.25% as was widely expected
  • Little changed in the statement 
  • Muted market reaction

As was widely expected the Fed funds rate has been kept at its present level of 1.0-1.25% following the conclusion of the latest policy meeting. Selected comments from the accompanying statement are shown below:

  • Expect economy to evolve in a way warranting gradual hikes
  • Labour market continued to strengthen, unemployment declined
  • Market based inflation compensation gauges still low
  • Risks roughly balanced, watching inflation closely
  • Inflation stabilizing around 2% medium term

There are no real fireworks here with the statement not deviating far from the previous version. It appears that a December hike remains probable. The market reaction has been fairly muted with no clear moves seen since the announcement. 

 

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