Uncertainty surrounding the outcome of next week’s US presidential election seems to be a major reason for the Federal Reserve to keep interest rates unchanged at its meeting on November 2. 
But the Fed signalled it could hike the rates in December as the US economy gathers momentum, inflation picks up and job gains remain solid. Policymakers also expressed more optimism that inflation was moving toward their 2% target.
Most analysts and investors now expect a rate hike at the Fed’s next meeting in mid-December, which will perhaps provide guidance on how many further rate increases are probable in 2017.
With financial markets anticipating a rate hike before the end of the year, the Federal Reserve held interest rates steady again while continuing to acknowledge that the case for a move is getting stronger. But the Fed decided to wait for further evidence of progress toward its objectives. 
Most analysts and investors expect a rate hike at the Fed’s next meeting in mid-December.
In September, Fed Chair Janet Yellen had said that a move before year’s end was likely as long as US employment and inflation continued to strengthen.
She also stressed that policymakers wanted to see “sufficient momentum” before tightening policy. 
Since then, job gains have continued at a solid rate and inflation has ticked higher, putting both close to the Fed’s long-run targets. The economy also has gained momentum, growing at a 2.9% annual pace in the third quarter after a fairly sluggish first half.
But economists have warned that global economic uncertainties, particularly the UK decision to leave the European Union, which has been dubbed Brexit, could keep the US interests lower than expected. 
Yellen herself had said earlier that a British exit from the EU could have “consequences for economic and financial conditions in global financial markets”.
Meanwhile, investors had all but discounted an increase in borrowing costs ahead of the key November 8 election in the US.
Polls showing Republican Donald Trump gaining ground on Democratic rival Hillary Clinton in the race for the White House sparked a slide on global equities markets, with the benchmark S&P 500 index headed for its seventh straight day of declines. Worries surrounding the presidential election seemed to have weighed heavily on investor sentiment.
A Reuters/Ipsos poll released early last week  showed the former secretary of state leading Trump by 5 percentage points, but some other surveys this week put the billionaire businessman ahead by 1-2 percentage points.
Analysts also noted that whether the Fed raised rates this week or not until mid-December would make little economic difference. With inflation still running below the Fed’s 2% target, some Fed officials have said they think they have room to continue pursuing an extremely gradual approach to rate increases.
If the Fed goes in for a rate hike next month, it would mark a resumption of the increases the Fed began in December, after having left its benchmark rate at a record low near zero for seven years.