Earlier today, the U.S. Federal Reserve (Fed) announced that it would maintain the federal funds rate target at 0.25%-0.50%. The decision is in line with market expectations as the announcement falls days ahead of the U.S. presidential election.
Setting the stage for December
The Fed has grown confident about increasing rates in recent months. From today’s announcement, the Fed stated “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 towards its objectives.”
Back in September, Federal Reserve Chair Janet Yellen noted that a hike before the close of 2016 was likely provided employment and inflation continue to strengthen in the U.S. Since that statement, economic activity has picked up in the U.S. after a slow first half. Investors are currently pricing in a 73% probability of a rate increase at the December meeting.1
There was no press conference after today’s meeting and no new economic projections were released. The stage has been set for the December meeting, where Janet Yellen is scheduled to speak to provide additional context into next month’s announcement.
What does this announcement mean for MD portfolios?
Today’s announcement is expected to have little impact on markets as investors are focusing on December’s meeting and the outcome of the U.S. presidential election on November 8.
MD builds our portfolios to meet your financial goals in the long run. Our portfolios are well diversified to ensure that all known risks are accounted for and actively managed. With that in mind, they are built to withstand potentially adverse shock events like a Fed meeting, Brexit or a commodity price adjustment.
Staying on track with your investment strategy though times of uncertainty has proven to be a prudent strategy in the long run.
We encourage you to contact your MD Advisor if you have any questions.