The Federal Reserve looks ready to roll with an interest rate hike in December

The Federal Reserve remains on track to hike rates in December, even though it held back Wednesday from making a strong pronouncement about the time frame.

Last fall, the Fed signaled that its December 2015 meeting was a likely time for a rate hike when it included the phrase "next meeting" in its statement, and indeed, it raised rates last December. Fed watchers expected a similar comment but the Fed statement on Wednesday, but the phrase wasn't there.

But strategists say the Fed still appears on course for a December hike, if financial conditions and the economy are strong enough, and it may be hedging its bets due to the timing of the election next week. The Fed also managed not to ruffle financial markets, even though some market watchers viewed the statement as slightly more hawkish than its September statement.

"I think they expect to go. I think they want to go, but they're still very skittish. We could see another employment pothole like we did in May, but I don't think that's going to happen. They may be concerned about the reaction to the election," said Ward McCarthy, chief financial economist at Jefferies.

The Federal Reserve's Federal Open Market Committee did give a nod to increasing inflation but noted that it is still below their target of 2 percent, and they said they could raise rates if there's "some further evidence" of meeting their objectives.

"I'm surprised they didn't put the 'next meeting' into the statement, but maybe it was election-related. In the past six days, there's been federal agencies getting involved in the election, and maybe the Fed didn't want to…sound like they're even more ready to hike rates than they were," said John Canally, a market strategist and economist at LPL Financial. Presidential polling was affected starting last Friday, when FBI Director James Comey said that his agency is looking into a new batch of emails from Democratic candidate Hillary Clinton.

"I think that was just a nod to the political shenanigans going on," Canally continued. "The case for an increase in the federal funds rate has continued to strengthen and instead of saying further evidence, they said 'some' further evidence. That seems like the bar is low."

Ethan Harris, head of global economics at Bank of America Merrill Lynch, said the Fed was wise to hold off before the election, and while it is set to hike in December, a sharp, negative market reaction to the election could make it wait.

"There is some value in the central bank waiting for the election outcome, not that they're trying to support one candidate. The election itself could have an impact on the economy and the markets, so why not find out. It's pretty clear from the action in the stock market that the equity market is worried about a Trump victory. It's worried about uncertainty of policy under Trump. Normally, the equity market would have a positive response to a Republican doing well," said Harris.

As for the Fed's statement, he said it made a case for December if conditions are right. "This is the classic place holder," said Harris. "The one statement in there I thought was interesting is the case for an increase has continued to strengthen," implying the Fed is on track.

Treasury yields were barely changed and stocks initially fell to session lows following the release of the Fed announcement at 2 p.m. New York time, but shares recovered in later trading. The dollar was also little changed.

McCarthy said the futures market indicated a 78-percent chance of a rate hike for December, up from 68-percent chance Tuesday. He said it was interesting that Boston Fed President Eric Rosengren did not dissent as he did at the last meeting, though Cleveland Fed President Loretta Mester and Kansas City Fed President Esther George both dissented again.

"It would have been bad for (Fed Chair) Janet Yellen if you had two consecutive meetings with three dissents. It looks like there was probably some kind of agreement on the language and he backed away," McCarthy said.