Fed’s October meeting all about December

When the Federal Reserve breaks from its two-day meeting this afternoon, officials likely will tell investors that interest rates are staying near 0%.

All the attention then will shift to December, the Fed’s last meeting of 2015 and likely its final chance to hike rates for the first time since 2006.

The Fed’s post-meeting statement (and market reaction) will be all about December, says David Kelly, chief global strategist at J.P. Morgan Funds.

“It is all about December rate-hike clues,” he says.

The Janet Yellen-led Fed has a fine line to walk. Its decision not to boost rates in September as Wall Street anticipated, and the mixed messages Fed members have sent out since last month’s meeting, fostered confusion in markets.

Since the Fed’s last meeting, the September jobs report came in weak, inflation has remained tame and global markets have stabilized after the first 10% market drop, or correction, in four years. That could give the Fed cover to repeat that it still needs to see “some further progress” on jobs and inflation before pulling the trigger on rate hikes, Kelly says.

Don’t expect the Fed to be too specific in its language or say anything that would definitively end the guessing game as to the rate hike lift-off date, says David Kotok, chief investment officer at Cumberland Advisors. Confusion over the Fed’s next move is likely to continue, he believes.

The Fed is likely to stick to its “data-dependent” message but “any deviation from that would be a surprise” to markets, says Bill Hornbarger, chief investment strategist at Moneta Group.

In pre-market trading, stock were again trading cautiously, with the Dow up 28 points, or 0.2%.