The minutes of the September Federal Reserve meeting released on Thursday indicated that an interest rate hike was certainly justified at the time but policy makers decided that waiting for more evidence of a global economic slowdown was a wiser course of action.
The Fed was uncertain if there was sufficient economic data on a wider scope to back up an increase in the interest rate. The decision to keep the rate at zero came as a surprise to Wall Street as well as emerging countries that looked forward to even the smallest change in the rate.
Policy Makers Expected Hike
The minutes of the session showed that most of the Fed members went into the meeting certain that a rate hike was imminent. And although it was a close call, the decision was made to maintain the status quo "… in part because of the risks to the outlook for economic activity and inflation, the committee decided that it was prudent to wait for additional information."
The data release sent the S&P 500 to a seven-week high as strategists interpreted the minutes as the Fed’s dovish view of a rate hike and with no worries of the U.S. economy, they predicted a rate hike was not going to happen before the end of the year.
According to Brad McMillan, Chief Investment Officer for Commonwealth Financial in Waltham, Mass, "You've got an absence of bad news and arguably some good news in there. Given the news since then, if they were willing to wait then for inflation to come back they're even more willing now."