Updated from 2:42 p.m. EST

While the

Federal Reserve

has given no indication that it will refrain from raising interest rates in December, a fifth rate hike this year is far from certain.

As widely expected, the Federal Open Market Committee raised the federal funds rate by a quarter-point to 2% on Wednesday and

issued a statement that was very similar to the one that came before it in September. But the central bank did upgrade its assessment of the economy through a couple of minor changes to its language.

Instead of saying output growth "appears to have regained some traction," the Fed said output "appears to be growing at a moderate pace despite the rise in energy prices."

In a speech last month, Fed Chairman Alan Greenspan said higher energy prices had reduced economic growth by about 0.75 of a percentage point. At the September meeting, the Fed referred to high energy prices only in the context of inflation.

Oil prices have fallen 14% since hitting a high of more than $55 a barrel on Oct. 25, and the Fed doesn't seem to be too concerned with prices at current levels.

The central bank also noted that labor market conditions have "improved" and that inflation and inflation expectations are "well contained." In the last communique, the Fed said the job market had improved "modestly" and that inflation had "eased."

"There is absolutely no hint or signal in the statement that the Fed intends to pause or take a respite from tightening when it meets in December," said Stuart Hoffman, chief economist at PNC Financial Services Group.

William Tedford, fixed income strategist at Stephens Capital management, agrees. He expects inflation to creep higher over the coming months and said the slumping dollar makes another rate hike more likely.

The Fed didn't mention the dollar in its statement Wednesday, but it is clearly something that policy officials are keeping an eye on. The greenback recently fell to a record low against the euro and a six-month low vs. the Japanese yen. A falling dollar raises import costs, which can feed into inflation, and it can prompt foreigners to take money out of U.S. assets.

Still, some economists maintain that a rate hike in December is no slam-dunk.

"The Fed prefers to keep things liquid around the turn of the calendar, especially when demand for year-end holiday cash is susceptible to surges," said Richard Yamarone, an economist at Argus Research.

Over the past two decades, the Fed has hiked rates in December only twice, in 1986 and 1988. It even skipped the December meeting during the tightening campaigns of 1994 and 1999.

Yamarone also noted that the economy simply isn't strong enough to warrant a fifth rate increase. He believes gross domestic product growth "will be lucky" to hit 3% in the final three months of the year, which is lower than the economy's potential.

Economists surveyed by

Bloomberg

recently lowered their forecasts for fourth-quarter growth to 3.5% from 3.8%, as high energy costs eat into consumer spending.

"Given our expectations of an ominous economic environment, businesses will probably not be able to pass along the widely reported soaring input and material costs," Yamarone said, adding that he expects the Fed to "sit on its hands at the current 2% benchmark overnight target rate."

Ashraf Laidi, chief currency analyst at M.G. Financial, said that while the central bank remains "cautiously optimistic" about the economy, another rate hike this year will depend on the direction of oil prices.

"If oil prices revert to the low $40s

per barrel for the rest of this month and into the first two weeks of December, then it would present an opportunity for a December rate hike," he said. "If, on the other hand, prices remain at least in the high $40s, then the contractionary risk on growth remains apparent, thereby precluding the need for a December tightening."

Before Friday's report on nonfarm payrolls, most investors assumed the Fed would take a breather at its final meeting of the year. But October's employment data pushed the odds for a December rate hike up to about 75%.

Nonfarm payrolls surged by 337,000 in October, more than twice the consensus estimate.

Still, a large chunk of that gain came from cleanup and reconstruction efforts after four hurricanes swept through the southeastern U.S. And Yamarone said he expects the number of pink slips to increase by year-end.

In recent days,

SBC

(SBC)

has announced 10,000 job cuts while

Marsh & McLennan

(MMC) - Get Report

is laying off 3,000 workers and

AOL

(TWX)

is shedding 700.

In its statement Wednesday, the Fed repeated its claim that policy accommodation can be removed at a "measured" pace but it also stressed that future moves would be dependent on the economic data.

"With underlying inflation expected to be relatively low, the committee believes that policy accommodation can be removed at a pace that is likely to be measured," the bank said. "Nonetheless, the committee will respond to changes in economic prospects as needed to fulfill its obligation to maintain price stability."

Although inflation has remained subdued this year and the job market has grown at an uneven pace, the Fed has embarked on a series of rate hikes since late June, saying emergency low levels are no longer required.

"The committee believes that, even after this action, the stance of monetary policy remains accommodative, and coupled with robust underlying growth in productivity, is providing ongoing support to economic activity."

Rebecca Byrne writes regularly for TheStreet.com. In keeping with TSC's editorial policy, she doesn't own or short individual stocks, although she owns stock in TheStreet.com. She also doesn't invest in hedge funds or other private investment partnerships. She invites you to send your feedback to

rebecca.byrne@thestreet.com.