Updated: 09-27-2016

7-3... That was the vote at the Federal Open Market Committee (FOMC) meeting to leave the target range for the fed funds rate unchanged at 0.25% to 0.50%. The "7" represents votes in favor of the policy inaction while the "3" represents votes by committee members who wanted action at the September meeting.

Specifically, Kansas City Fed President George, Cleveland Fed President Mester, and Boston Fed President Rosengren preferred to raise the target range for the fed funds rate to 0.50% to 0.75%. The fact that there were no dissents by Fed Governors underscores the solidarity Fed Chair Yellen has achieved in the governor ranks.

It is what it is, yet the three dissents stand out to us as a pretty good indication that the market is going to keep getting jerked around by the lip service from Fed officials between now and the December 13-14 FOMC meeting.

We say that knowing the language employed in the policy statement itself was pretty noncommittal in terms of likely next steps. It was conceded that near-term risks to the economic outlook appear roughly balanced. Furthermore, it was said that the case for a rate hike has strengthened but that the committee decided, for the time being, to wait for further evidence of continued progress toward its objectives.

The latter is a re-formulated nod to the Fed's focus on being data dependent -- and being that way means it reserves the right to keep doing nothing or to do something if the data support some type of policy action (which could entail more easing just as it could more tightening).

Fed Chair Yellen said the rate hike reservation at the September meeting was tied to concern that labor market slack is being taken up at a slower pace than previous years and that inflation continues to run below the 2 percent objective.

The updated economic projections don't connote an expectation that more policy accommodation will be necessary anytime soon, yet they do lean in favor of further policy rate normalization in the months ahead based on a median projection for the unemployment rate to slip to 4.6% in 2017 from 4.8% in 2016 and the PCE inflation rate to increase to 1.9% in 2017 from 1.3% in 2016.

Any normalization, though, is still apt to occur at a gradual rate. The median projection for the fed funds rate is 0.6% for 2016, 1.1% for 2017, 1.9% for 2018, and 2.6% for 2019. Notably, the median projections for 2016-2018 have been reduced by 25 basis points to 50 basis points from the projections made in June.

As everyone is well aware by now, any Fed projection can be taken at face value, yet one can't assign deep value to them knowing the Fed doesn't have a very good forecasting record.

What, then, does the FOMC's latest proclamations mean for the market? Well, that is the question, isn't it?

It seems to us that the Fed has left the market in a position to keep guessing when the next rate hike will occur, but that it has allowed "for the time being" a half-full punch bowl to be kept on the table.

For the time being then, market participants will likely keep drinking from that punch bowl because they know it is the liquid gift that keeps on giving.

--Patrick J. O'Hare, Briefing.com

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