The Fed's message to market participants was clear: do not discount the possibility of a December liftoff. It did not, however, indicate that it is certain or even likely.
Prior to today's announcement, analysts pegged the probability of a December liftoff at 40%. Based on recent Fedspeak, it seems that the Committee is divided on its outlook for inflation and its views about the appropriate policy path. There is a doubt that Chair Yellen was able to resolve the differences in the past two days. Whether she is able to build consensus around a rate hike over the next six weeks will depend on the data.
"Given the recent setbacks in employment, manufacturing and business investment, the sceptics will probably need to see a decisive improvement. In other words, the burden of proof appears to be on the hiking camp", says Societe Generale.
