After convening in late October in their second-to-last meeting of the year, the Federal Open Market Committee (FOMC) placed yet another hold on the rate hike, leaving the federal funds rate at the current 0 to 1/4 percent target range.
A statement from the FOMC showed that household spending and business fixed investment rose at solid rates in recent months, while the housing market continued to improve.
On the downside, government officials saw net exports fall soft, job gains slow, and the unemployment rate held steady. In addition, inflation remains under the Committee's objective of 2 percent, reflecting falling energy prices and prices of non-energy imports.
"To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate," the statement said. "In determining whether it will be appropriate to raise the target range at its next meeting, the Committee will assess progress—both realized and expected—toward its objectives of maximum employment and 2 percent inflation."
This decision left one question on everyone's mind in the mortgage industry: When will the Fed raise rates?
But the answer to this question may come next month, pending that economic data proves to be promising.
Minutes from the FOMC's October meeting showed that most of the members appear to be on-board for a December rate increase.
"Most participants anticipated that, based on their assessment of the current economic situation and their outlook for economic activity, the labor market, and inflation, these conditions could well be met by the time of the next meeting," the minutes explained.
However, the Committee placed emphasis on "implications for the medium-term economic outlook of the data received over the upcoming intermeeting period," while a few others "judged it unlikely that the information available by the December meeting would warrant raising the target range for the federal funds rate at that meeting."
One of the key pieces of information that was presented in the FOMC's minutes was the fact that members alluded to a rate hike at their "next meeting."
"Members emphasized that this change was intended to convey the sense that, while no decision had been made, it may well become appropriate to initiate the normalization process at the next meeting, provided that unanticipated shocks do not adversely affect the economic outlook and that incoming data support the expectation that labor market conditions will continue to improve and that inflation will return to the Committee’s 2 percent objective over the medium term," the minutes said.
A couple of Committee members were concerned that this change in language may be taken out of context as "signaling too strongly the expectation that the target range for the federal funds rate would be increased at the Committee’s next meeting."
Click here to read the FOMC's October minutes.