Why FOMC Minutes Rule Out a September Hike

So the minutes from the last Federal Open Market Committee meeting were released early and markets spiked hard and are still well above where they were before the minutes came out.

Most of the Fed heads were of the opinion that conditions were good enough that they should be close to hiking rates. No new news there. Already, the pundits are saying it's "all systems go" for next month.

At the last FOMC meeting, the vote was 10 to zippo to keep rates between 0 and 25 bps (where they've been sitting for seven years). Nothing new there, either. We know that the majority of the FOMC has been for keeping rates where they are for now.

Some of the Fed members argued in favor of a rate hike, citing worries about inflation or future financial instability.

But where they see inflation on the horizon is beyond me. We just have to look at today's CPI data and there is absolutely no sign of inflation as yet. And where they think financial instability will occur is beyond me totally, unless they're referring to a U.S. housing bubble down the road.

A few FOMC members wanted to continue to take a wait-and-see approach given that inflation is nowhere in sight and labor-market conditions still don't warrant a rate hike. Pretty much all of them seemed to agree that the Fed's 2% inflation target won't be reached anytime soon given low oil prices now and in the foreseeable future, coupled with the U.S. dollar's current strength.

My take remains unchanged as well -- no rate hike next month, and maybe none this year at all (although I do desperately want the Fed monkey/overhang off our backs).

So, there you have it: The more things change, the more they stay the same.

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