Federal Open Market Committee September Meeting – October Surprise

The minutes from the Federal Reserve’s monetary policy setting committee, the Federal Open Market Committee (FOMC), September meeting provide a more detailed view of the committee’s concerns and deliberations regarding global economic and financial developments, and the decision to wait before beginning the process of raising interest rates.

Concerns focused on the impact that a global economic slowdown, notably China, but including other economies, and renewed declines in energy prices would have on US economic growth, the labor market and inflation. While there was agreement that the impact would likely be small, developments had increased the downside risk for the forecasts. There was general confidence in the outlook but it was decided that it would be prudent to wait for more information. There was agreement that the conditions required for an increase in rates had not been met yet, but also that they could be by the end of the year.

However, data released since the September meeting, in particular, no firming in core inflation and a surprisingly weak early October employment report (jobs), may push the date of liftoff even further into the future. Absent a quick rebound in employment growth and less downward pressure on inflation, incoming information about economic conditions since the September meeting is no better or worse. The timing of the first increase in interest rates could move into 2016.

 

 



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1 reply

  1. It seems like the Federal Reserve is still pretending they can actually influence rates. They printed money like crazy and yet we still have periods of deflation, unable to even come close to meet the target 2% inflation rate! What this shows is how little power the Federal Reserve actually has, and that this so called public policy of analyzing the market then waiting to raise rates is mostly for show. They couldn’t raise the rates if they wanted to, because they do want to, they’ve been trying to keep it at 2%, but they can’t! Then they come out with boiler plated paragraph statements about China and Energy with zero actual analysis given, in the face of stagflation, because to be blunt the entire world economy is stressed with constant environmental, political, social, and economic unmitigated disasters. Just another reason to not have a private banking cartel have the power of controlling our monetary supply. I would give them the benefit of the doubt they are doing their best to keep the inflation rate at a predictable rate, however after clearly falling short so often, I think it is time we start talking about the limits of the Fed, and a more stable monetary system, not based so much on speculation. Having some actual real regulations on the manipulation of energy prices, and taking them out of the gambling casino would probably have more effect on interest rates than anything the Fed could do. But we are for some reason forbidden to talk about that.

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