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.