There are two crucial things to note in the accompanying statement. First, the US central bank is responding to global concerns, especially in emerging markets and China. Recent turmoil there underlines the fragility of the situation, and US policymakers are alive to the risks this poses to the US. Second, they have revised down their growth and inflation expectations, a signal that they are concerned that all is not well with the US economy either.
This goes to explain the muted reaction in markets. No rate hike should be a reason for at least some gains in the stock market, especially if a December hike now looks less likely as well. But the concerns contained within the statement signal that there is little that can be taken as bullish for equities. Instead, we may continue to see a downward progression for stock markets, as investors adjust to a world where growth is expected to be weaker. The US dollar has taken a hit too, as markets mark down their expectations of a December move. The chances of no move at all this year just got a lot higher.