- Today the possibility of a Fed rate hike in December rose about 10 points
- We’re now at about an 80% probability, at least the way the markets assess the odds
- That the Fed will raise rates in December after failing to raise rates today
- If you remember, after they didn’t raise rates last time there was some probability of a November rate hike
- But by this morning, the probability of November had pretty much been reduced to about zero
- With everybody believing that the Fed would raise rates in December
- And now, as a result of their failure to hike in November
- The probability apparently is now higher based on the language of their non-hike
- This, despite the fact that there were only 2 dissenters when the Fed didn’t raise interest rates the last time they met
- Three members voted to hike and six voted not to hike
- This time it was 7 to 2 in favor of not hiking
- So what happened between meetings that caused the one guy who wanted to hike rates last time to decide he doesn’t want to hike rates now?
- Is it possible that some data came out over the course of those weeks that caused him to re-assess his feelings about the strength of the economy
- And if so, why is that member going to flip back to “hike” in December, after just flipping to “no hike”
- Is it pure politics?
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