The US Federal Reserve’s rate-setting Federal Open Market Committee (FOMC) has voted to leave interest rates on hold.
But the Fed set the stage for a hike in December amid signs of the economy picking up.
The Fed said:
The 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 stance of monetary policy remains accommodative, thereby supporting further improvement in labour market conditions and a return to two per cent inflation.
The FOMC raised the benchmark overnight interest rate to a range of 0.25 per cent to 0.5 per cent in December last year, which was the first rate hike in almost a decade. Previously, rates in the US had been held at near-zero since 2008.
But rates have been held steady so far this year. The vote was 8-2 in favour of holding rates today.
Esther George, of the Kansas City Fed, and Loretta Mester, of the Cleveland Fed, voted to raise the target range to 0.5 per cent to 0.75 per cent.
In September, the vote in favour of holding rates was 7-3, with Boston's Eric Rosengren joining George and Mester in favour of raising then.
The Fed said the labour market has continued to strengthen since the FOMC last met in September. Growth in economic activity has also picked up, while unemployment rate is little changed.
The Fed was not expected to make any move ahead of the US election, with the race between Hillary Clinton and Donald Trump appearing increasingly tight ahead of a 8 November vote.
Chair Janet Yellen indicated in September that a rates move in 2016 was likely if employment and inflation continue to get stronger.
Tim Graf, head of macro strategy in Europe at State Street Global Markets, commented:
As expected, the Federal Reserve looks to be waiting for the US election to pass before turning their well-telegraphed intentions to hike rates into action. At this point, with labour market data sufficiently strong and inflation trending back towards target levels, it would take a significant financial market shock to stay their hand at the 14 December meeting.