Normally the release of minutes of the Federal Reserve's rate-setting committee are the lead headline, but they had to settle for third place Wednesday. Takeaways however were dovish. A lot of the focus was on Fed concerns about developments in Greece and China, where conditions have taken a turn for the worse in the few weeks since the meeting.
While the Fed saw conditions still approaching those warranting rate lift-off, many participants argued that they need to see more evidence on employment and inflation before moving on rates. In addition, a number of officials warned against a premature tightening. Not surprisingly, the minutes did not provide any insight into liftoff timing, reiterating that a decision would be made on a meeting-by-meeting basis.
While the Fed's decision would directly only focus on U.S. rates, the cost of money here affects rates elsewhere in the world too -- particularly in emerging markets that have dollar-denominated debt. If the Fed makes money slightly more expensive here, it simultaneously makes it much more expensive overseas, and the fear of sparking a rate riot in emerging countries could be enough for Fed officials to push back their liftoff plans into the late winter rather than September, which is the current consensus expectation.
-- Jon D. Markman
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