Wednesday, October 28, 2015

Fed Holds Rates Steady

Following a meeting of the FOMC, the Federal Reserve monetary policy setting committee, the Fed has announced that it will maintain rates it controls at current levels.

This was broadly anticipated since for technical reasons (There is no scheduled press conference after this meeting while there is one after the December meeting. ), it would have been very unusual for the Fed to make a move at this meeting.

Much more significant, the FOMC statement released by the Fed included new language which said the Fed would determine “whether it will be appropriate to raise the target range at its next meeting.” Previous statements have not had any time element to this statement, saying only that policymakers “would determine how long to maintain” rates at current low levels.

The Fed is extremely data driven and the statement repeated that FOMC members want to see “some” continued progress on labor markets and be “reasonably confident” inflation is rising toward their 2% annual target before hiking rates.

There is an underlying desire by the Fed to raise rates by 25 basis points, if for no other reason than to just show they can, indeed, raise rates. Unless, there is a significant downturn in economic data, or a major negative stock market activity, between now and the December 15-16 FOMC meeting, a rate hike at that time remains a very strong possibility.



  1. Robert,

    I see that you're still holding on to the notion the FED will raise rates before Santa Clause pays a visit. Since you keep mentioning that the FED is data driven. Wait for the GDP 3rd quarter estimates release tomorrow Robert, then we'll see if you and the rest of MSM are going to be singing another tune.

  2. And...just as I thought...

    Today BEA released Q3 GDP Misses Expectations, Tumbles To 1.5%, some booming economy.