"...the case for an increase in the federal funds rate has strengthened." -Janet Yellen, Chair, Federal Reserve Bank of the United States

These were the most important words in Wednesday’s announcement - not “...the Committee decided to maintain the target range for the federal funds rate at 1/4 to 1/2 percent.” Going into this week’s meeting, the Wall Street expectation of a rate increase was just 22%, so no action was no surprise.

Now let’s dissect what to watch until December:

• “Although the unemployment rate is little changed in recent months, job gains have been solid, on average.”

• Pretty neutral language in regards to employment. This is, of course, the first half of the Fed’s dual mandate so it is always of concern. Here they admit that unless things dramatically take a turn for the worse, they’re happy with the current measurement.

• “Household spending has been growing strongly but business fixed investment has remained soft.”

• This is largely due to the current political climate in the U.S. Uncertainty is abound. The upcoming election of the most polarizing presidential candidates in modern history mixed with the potential for a swing in control of Congress has businesses apprehensive to invest in growth. Don’t expect this to change after November, 8th!

• “Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting earlier declines in energy prices and in prices of non-energy imports.”

• The second half of the Fed’s dual mandate is to stabilize prices. Their inflation goal is 2% and here they highlight why the economy has been tracking below that. In short, if we don’t see a rise in the prices of non-energy imports and energy, expect the Fed to punt again.

• “...and readings on financial and international developments...”

• In other words, if we see a large correction in the stock market, the Fed will be accommodating. If emerging market economies take a deeper dive or some kind of geopolitical event occurs, the Fed will maintain.

Of course, there are always many factors that weigh-in on the FOMC’s decision making, but you can rest assured these are four things that the committee will be scrutinizing closely in the next couple months. You should be too.

This was analysis of the Federal Reserve’s official comments and press release:

https://www.federalreserve.gov/newsevents/press/monetary/20160921a.htm