On Wednesday the Federal Reserve announced that it would keep interest rates unchanged for the time being. In doing so, however, Chairwoman Janet Yellen indicated that one increase this year would still be appropriate, barring any major new risks to the economy.
The markets turned sharply positive after the announcement and closed trading up significantly with the Dow gaining .90%, the S&P 500 gaining 1.09%, and the Nasdaq gaining 1.03% on the day.
The central bank stood pat even though Yellen said that most senior Fed leaders “are generally pleased with how the economy is doing.” However, Yellen said the Fed still wants to see more progress in the labor market before raising rates — more people finding jobs or looking for work again — and noted that inflation is still on the low side.
Predictions of a rate hike at the Fed’s December meeting (post election) reflect a general hawkish bent with 14 of the 17 Fed officials polled expecting a rate increase by year-end.