Federal Reserve not Increasing the Interest rates Right Now but Maintains an

The US Federal Reserve’s decision to keep rates on hold last week didn’t come as a surprise to CMC Markets trader Sheldon Slabbert.

The labor market has healed enough for an interest rate hike, he said, but he remains concerned about inflation continuing to run well below the Fed’s 2% annual target.

Asia Unhedged was wrong on its bet that the US Federal Reserve would raise rates last week, but on the other hand, we actually got what we wanted. Lacker expressed an inclination to raise the benchmark rate by 25 basis points in an effort to align the monetary policy with the progress that the United States economy has made.

And herein lies the key dilemma for the Fed in its policy deliberations on when to increase interest rates.

Fed chair Janet Yellen has left the door open for a rate increase during the FOMC meeting on 27-28 October, declaring the meeting “live” even though it won’t be followed by a press conference.

Indeed, the Fed indicated that the “economy has been performing well” and it expects it to continue to do so.

The S&P 500 index, which is 9 percent below its May record-high, has seen moves of at least 1 percent in more than 12 sessions since August . 20 as investors fretted over a China-led global economic slowdown and the looming rate hike.

Atlanta Fed President Lockhart is scheduled to speak again later on Tuesday. He argued that the US economy had improved significantly over the last six years.

From September 23, the central bank changes its main policy tool for commercial banks to a three-month deposit facility, from a two-week deposit facility, meaning banks may deposit their funds at the central bank for a longer period than before.

“As things settle down, I will be ready for the first policy move on the path to a more normal interest-rate environment”, Lockhart said.

The chorus from Fed officials for a rate hike this year had started over the weekend and now it seems to be turning into a full orchestra.

Matthew Turner, a precious metals analyst at Macquarie, said that the Fed’s message was somewhat confused.

Mr. Lockhart’s address was mostly upbeat about the domestic economy including developments for transportation, logistics, tourism and lodging, residential construction, commercial real estate and business services.

That’s also up from just above the $1,100 level ahead of the Fed’s hold which sent the dollar tumbling and bond yields falling.

This article originally was published at 10:24 a.m.