The US economy is relatively strong compared to its peers, but a global economic slowdown, low inflation in the USA and volatile stock markets encouraged the Fed to once again punt on raising rates.

In an updated economic forecast, 13 of the 17 Fed policymakers said they see the first rate hike occurring this year. The US dollar weakened against its major currency counterparts as the threat of higher interest rates abated.

“We view the Fed’s statement as dovish, lowering the odds of a rate hike in the near term”, analysts at Goldman Sachs Asset Management said in a note after the central-bank decision.

Instruments such as federal fund futures and overnight indexed swap USDOIS are pricing in only about one in two chance of a rate hike by the end of year.

Instead, the Fed retained language it has been using that it will be appropriate to raise interest rates when it sees “some further improvement in the labor market” and is “reasonably confident” that inflation will move back to the Fed’s optimal inflation target of 2 per cent.

Premier Oil was down 7% but Rangold Resources was up 4% on hopes there would be an upsurge in demand for precious metals it mines as at times of investment uncertainty some seek out gold and silver perceiving them as safer places to park their money. So, even with the October and December meeting on the horizon, the course of the world economy remains uncertain.

The benchmark stock indices in Canada and the United States opened significantly lower on Friday, following significant drops in European markets.

Economists and Fed-watchers had been split on whether the central bank would raise rates this month, and many had correctly suggested it would hold off in light of last month’s turmoil on global stock markets and concern over growth in China. Unemployment in August fell to 5.1%, its lowest level since April 2008.

She said it is still unclear how rapidly its economy will cool and how well China’s government can manage that slowdown.

The two-year swap rate was unchanged at 2.72 percent and 10-year swaps were unchanged at 3.6 percent.

The big takeaway from the Fed meeting came in three parts.

“When U.S. interest rates rise, capital flows could reverse, weakening emerging market currencies and making dollar-denominated debts harder to service”. In addition, the target inflation rate of around 2 percent has not been achieved either – which places more pressure on the Fed to hold off on the increase.

“The Fed’s assessment of the global economic conditions has made investors nervous as uncertainty about the timing of a US rate hike continues”.