The US Federal Reserve kept interest rates unchanged Wednesday and, in a direct reference to its next policy meeting, put a December rate hike firmly in play.
Investors had expected the Fed to stay pat on rates, but the overt reference to December came as a surprise, Reuters reported.
The central bank also downplayed recent global financial market turmoil and said the US labor market was still healing despite a slower pace of job growth.
“In determining whether it will be appropriate to raise the target range at its next meeting, the committee will assess progress — both realized and expected — toward its objectives of maximum employment and 2 percent inflation,” the Fed said in a statement after its latest two-day policy meeting.
Investors quickly placed bets reflecting a higher chance the central bank will raise rates in December, with futures contracts implying a 43 percent possibility, compared with 34 percent before the statement.
The US dollar rose sharply and yields for US government debt soared in anticipation of higher rates.
US stock prices initially fell but regained momentum and closed sharply higher.
Michael Feroli, a former Fed economist now at JPMorgan, said the Fed statement is the first since 1999 in which policymakers have pointed to a possible rate increase at the next meeting.
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