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Fed Says ‘Case To Raise Rates Has Strengthened’

Investors will have to wait another month, at least, for higher interest rates. And the economy in general will continue to feel the effects of Janet Yellen’s historically low-interest rate policy, which looked to be coming to an end 10 months ago, and critics have called for the end of much longer than that.

On Wednesday, following their monthly meeting, the Federal Reserve decided not to raise the short-term rate the U.S. central bank controls. But it did indicate that a rate increase in coming before of the world. The Fed statement said that the case for raising rates had “strengthened,” but that it was holding off doing so for now.

The Fed statement included the fact that three of the U.S. central bank voting members dissented against the Fed’s decision, which was the highest number of people voting against the Fed decision to hold rates steady all year.

Following the meeting, U.S. short-term interest rate futures trimmed earlier losses and some nearer-term maturities rose on Wednesday, which seemed to suggest that at least some traders thought the Fed’s statement indicated that future rate hikes would be even more gradual than previously thought.

The change in prices suggests traders are trimming bets on a rate hike later this year. Before the report traders saw about a 58% chance of a December rate hike, and were betting on another hike in 2017.

The price of futures contracts tied to the Fed‘s benchmark policy rate moves inversely to the rate that traders expect at any given point in time.