In its press release (see here), the Federal Reserve said that pressures on prices are a bit stronger. Therefore the probability of a rate hike at the next meeting in December (13/14) is higher.
Discussions on inflation are the main change seen in the press release when it is compared to the previous one in September. (see here) The Fed also noticed that consumers expenditures have a lower momentum.
The Federal Reserve wants to have larger margin in the management of its monetary policy and that’s the main reason for the expected change in rates.
The Fed is very attentive to the asymmetric dynamics associated with its monetary policy. Acting too early is taking a risk on the economic activity, the Fed doesn’t want that. It prefers acting later even if it is at the price of higher inflation. We are in this configuration.
It will act in December to have margin but will not send strong guidances for 2017 as there are a lot of uncertainties for the US economy and for the world economy. It wants to keep its ability to manage its strategy without tying its hands. I already mentioned that point here
The target is not to constrain the economy but to have margin without changing too much investors’ expectations. That’s a real challenge
NB: I make the implicit hypothesis of a Clinton victory at next week presidential election. A Trump victory would change the picture. I have wrote (in French here) that the risk with a Trump victory is a negative shock for the global economy. In that case the Fed could be on a wait and see mode.