China’s arrival as a global economic power was evident as the Federal Reserve nudged away from raising interest rates.

“Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term”, the Fed said in its statement.

The Fed “was satisfied with the US economy, noting moderate growth in household spending and business fixed investment, along with further developments in housing markets”, said Ozlem Yaylaci, USA economist at IHS Global Insight in Lexington.

In maintaining its policy, the Fed is keeping its benchmark short-term rate near zero, where it’s been since the depths of the 2008 financial crisis.

The Fed’s got just two more FOMC policy meetings for the year in October and December.

The interest rate is now close to zero, and has been that low since 2008. Low oil prices have also inhibited inflation.

In a press conference, Yellen cited the recent bear markets – especially massive stock sell-offs in China – as one of the main reasons why the Fed held pat on its borrowing costs.

But the Fed kept its stance steady, declining to lift rates from record lows.

“China was an influence in this meeting, whereas in the past that would have been much less important”, Hong Kong-based JPMorgan Asset Management chief Asia market strategist Tai Hui (許長泰) said. “But we expect the upside to be limited…as long as the Fed does not communicate that there will be no hikes for the time being, the tightening cycle continues to hang over the market”.

EUROPE SLUMPS: Germany’s DAX was down 2.7 percent while the CAC-40 in France fell 2.3 percent.

But there has been mounting concern outside the US over a potential “lift-off” and negative repercussions of a rate rise – the first since 2006 – on emerging economies.

By contrast, the Canadian dollar soared, and was up almost a cent on the day in early trading, before settling back down to 75.8 cents U.S. But it’s really more a case of the US dollar falling against other currencies, as traders realized USA interest rates aren’t rising in the short term, and there are other currencies on which you can earn higher interest.

The unemployment rate in August dropped to a seven-year low of 5.1 percent. The US Fed has indicated a possibility of a rate hike by end-December 2015, but the drivers of the decision have become ambiguous.