“Several (Fed) members judged that it would be appropriate to increase the target range for the federal funds rate ‘relatively soon’ if economic developments unfolded about as the Committee expected.” That’s according to the just-released minutes from the September FOMC meeting.
Never mind that the economy has created nearly 15 million jobs over the last six years. Never mind that the unemployment rate is 5.0%, half what it was at its peak. But try convincing the Fed it’s time to hike rates even a second time in the economic cycle.
It’s a very dovish, very cautious Fed when it comes to pulling the rate-hike trigger. It’s what I sometimes call an “All my ducks in a row” Federal Reserve.
Think about it.
Worries about China, a wobbly stock market in January, a rising dollar, a surprise Brexit vote, and a weak employment report (remember May’s disappointment?). None of these created any significant damage to the U.S. economy. Yet, they all forced a pause in the rate-hike cycle.
So, what might be lurking behind the next corner that might persuade the Fed from going ahead with another 25 bp increase? Stay tuned.