Last night Janet Yellen and her colleagues at the Federal Reserve announced they were to keep the US benchmark interest rate at a record low after a much anticipated two day meeting.

Going into the meeting the futures markets had priced in around a 30% chance of hike and a survey of economist also pointed to keeping rates unchanged.

As expected, Janet Yellen blamed the recent market volatility stemming from Chinese growth concerns;

“Developments we saw in financial markets in August partly reflected concerns of downside risk to Chinese economic performance and the deftness with which policymakers are addressing those concerns” said Chairwomen Yellen.

US stock initially rallied but later fell back after the press conference.

Janet Yellen said the committee was also held back by the low rate inflation which is well beneath the Federal Reserve’s 2% target, the primary mandate of the FOMC.

Another mandate of the Federal Reserve, Full Employment, was a variable they seemed satisfied with, they noted the jobs market continued to improve as the unemployment rate fell and the quality of jobs increased.

Taking into consideration the comments of Yellen during the conference, it appears that in absence of the market volatility three weeks ago , there would have been a rate hike last night.

“We’d like to have a little bit more confidence,” Yellen says.

In a market reaction to the decision, the Dollar weakened and European stocks fell over the China concerns Yellen raised.