If the Federal Reserve hikes interest rates in December, it will do so under similar, difficult conditions it encountered with the move it took at the same time a year ago.
While the U.S. economy has shown a bit more life recently, full-year growth is unlikely to eclipse 2 percent, and fourth-quarter gains probably won't mirror the mild burst the third quarter saw.
After clearly signaling in October that a December rate hike was coming, the Fed had virtually no choice but to move. Now, the market again is pricing in tightening (giving it a 74 percent probability), so the Fed probably will go next month. (A move this week is all but off the table for multiple reasons, not the least of which is next Tuesday's presidential election.)
However, there likely will be two key differences in how Federal Open Market Committee members approach the move.
First, this week's meeting will conclude Wednesday probably with the Fed only hinting at, but not promising, an increase. Second, when the Fed hiked last year for the first time in nearly a decade, the decision came with officials indicating that four more moves would be on the way in 2016. The net result was two months' worth of market volatility in which the S&P 500 flirted with bear market territory. The Fed has yet to hike even once this year.