2017.09.2014:06:00UTC+00Fed Stands Pat On Rates, Will Reduce Balance Sheet In October -- Update

The Federal Reserve on Wednesday maintained its benchmark interest rate at a range of 1% to 1.25%.

As expected, the Fed said it will begin shrinking its bloated $4.5 trillion portfolio in October by allowing $10 billion in bonds to mature without replacing them.

The portfolio includes Treasury and mortgage-backed securities that were acquired during and after the 2007-09 financial crisis in a successful program to prop up the economy.

Hurricanes are unlikely to materially impact economy in medium term, according to the Fed's statement.

"Information received since the Federal Open Market Committee met in July indicates that the labor market has continued to strengthen and that economic activity has been rising moderately so far this year. Job gains have remained solid in recent months, and the unemployment rate has stayed low," the Fed said.

The decision culminated a two-day meeting of the Federal Open Market Committee against the backdrop of stubbornly low inflation and rising geopolitical tensions.

The Fed made no change to its so-called 'dot plot' of rate projections for this year and next, strongly hinting at a December rate hike.

However, the Fed lowered its rate forecast for 2019 to 2.7% from 2.9%.

Some analysts thought the Fed might would raise interest rates today because of Chairman Yellen's press conference.

With Yellen's commentary able to soothe markets, the Fed raised its benchmark federal-funds rate at its last three press-conference meetings.