While the Fed's constant flip-flopping and ultimate failure to deliver on a promise hurt its credibility, there were some good reasons not to hike rates in the beginning of the year (China, Brexit).
For example, Yellen said the Fed is keeping a close eye on prices for commercial real estate, which are heating up.
"If we had not received these mixed messages, I don't think anybody would have been surprised", said Sam Stovall, U.S. equity strategist for S&P; Capital IQ.
"The Federal Reserve is not politically compromised", she said.
They have appeared increasingly divided on the urgency for a rate increase.
The Republican nominee disputed the independence of Yellen, an Obama appointee. "Those are factors we don't consider and I'm not going to get involved in commenting on the election".
Yellen denied the insinuation at a Wednesday news conference.
The neutral rate is seen at low levels and the policy is seen as modestly accommodative with little risk of falling behind the curve. "We do not discuss politics at our meetings and we do not take politics into account in our decisions", she said.
Signs of labor-market strength have led bond traders to price in a growing likelihood of a rate increase by year-end. The US faces a highly consequential presidential election in less than two months.
"The Fed appears to be firmly on track for a December hike", Paul Ashworth, chief United States economist at Capital Economics, said in a note to clients.
Perhaps one of the most noteworthy observations from Wednesday's meeting is a slight-but-significant change in the voting. It was the most "no" votes since the December 2014 meeting.
This faction believes the Fed must begin to gradually nudge up rates or risk having to lift them abruptly down the road to stave off runaway inflation, a strategy that increases the risk of recession.
Speaking at a news conference after a Wednesday meeting, Yellen noted that the historically low rates haven't caused the economy to overheat. FOMC officials acknowledged the improvements in the economy and job market, leading analysts and investors to conceive a rate hike this year as a more likely event.
A strong economy and low unemployment are generally reasons to expect the Fed to raise interest rates, but low inflation is generally seen as a reason to keep rates low.
But this week, the general consensus switched, as Fed watchers bet that the bank wouldn't move on rates due to recent weaker than expected economic figures. Yet inflation has remained below that level for more than three years. The statement reflected a continued Fed belief that the target would be hit "as the transitory effects of past declines in energy and import prices dissipate and the labor market strengthens further".
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WASHINGTON " The Federal Reserve is keeping a key interest rate unchanged but sending a strong signal that it will likely boost rates before the end of the year.
They all wanted to go ahead and hike today.
Until recently, many Fed watchers had thought that a rate hike was likely this week.
Stocks advanced with bonds and the dollar fell as Federal Reserve officials lowered their outlook for long-term interest rates.
The projections reflect the forecasts of all 17 participants in the Fed's deliberations.
Three members of the policymaking committee dissented from the decision.
"US Fed leaves rates unchanged.Decision on expected lines", Economic Affairs Secretary Shaktikanta Das tweeted.
Committee members said that the case for an increase in the federal funds rate has strengthened but decided, for the time being, to wait for further evidence of continued progress toward its objectives. A Fed that can wait so the economy can run for a while, or a Fed that can't wait until it sees "the whites" of inflation's eyes?
"Against this backdrop, the Committee chose to maintain the target range for the federal funds rate at 1/4 to 1/2 percent".
But even those who expected no move from the Fed wondered how it would justify standing pat.
At the time, it forecast four additional rate increases this year.
The British pound steadied after tumbling in the previous session, extending its losses after head of Germany's Bundesbank warned on Monday that banks based in Britain could lose "passporting" access to EU markets after Britain's pending exit from the European Union.
Wall Street also moved higher.
The Dow Jones industrial average added 82 points, or 0.5 percent, to 18,211 as of 10:15 a.m. The S&P; 500 index added 0.9 percent to 2,159.37 at 3:46 p.m.in NY, after closing nearly unchanged over the previous two days.
The dollar had already fallen more than 1 percent against the yen before the statement in response to the Bank of Japan's policy shift earlier on Wednesday.
