Market Insider

Words the markets want to hear

Traders work on the floor of the New York Stock Exchange.
Lucas Jackson | Reuters

Whether the Fed raises rates or not, markets may move more on its words than actions.

Traders have been betting against a central bank rate hike, so news of such an increase could get a negative response. But some say markets would be more relieved in the event of a rate rise if the Fed assures a slow path higher for rates, and it could do that in the interest rate forecasts of its members and again in its post-meeting news briefing. The markets will also seek a clear explanation of why the Fed did not hike, if it holds rates steady.

"It will be a case of watch what they say, not what they do," said Jim Caron, fixed income portfolio manager at Morgan Stanley Investment Management.

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