FOMC, delay was not a “close” call

Since the September FOMC meeting, a number of FOMC participants have declared that the decision to not raise rates was "close." The minutes do not justify this interpretation of the meeting. As expected, most participants agreed that, while domestic activity was expanding moderately, the risks to US economic growth had risen. 

This sentiment was reflected in the discussion of the policy decision. The committee noted that "because of the risks to the outlook for economic activity and inflation [arising from developments abroad], the Committee decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated and that inflation would gradually move up toward 2 percent over the medium term." 

"In the event, these risks were of sufficient magnitude to a sufficient number of participants to warrant an additional risk sentence in the statement itself, "Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near term." There is nothing in the minutes that seemed to call for a September move", says Barclays.

Overall, the minutes present a view of a committee that was split between those participants who saw conditions as warranting a rate hike by the end of this year [not at the September meeting] and those who said that "although the time for normalization might be near, it would be appropriate to wait for information ... confirming that the outlook for economic growth had not deteriorated significantly." 

"The split between these two camps in the FOMC seems to arise from genuine differences of opinion on how much to weigh economic activity and how much to weigh inflation when deciding on the appropriate policy path", added Barclays.