It's Fed Day! The "Will They Won't They?" Will Finally Be Answered

Today, Thursday September 17, 2015, is the final day of the Fed's two day meeting. This has been one of the most anticipated meetings in some time, and for good reason. Although any rate increase will be modest, the shift in policy direction and market perception will be massive, indicating the beginning of the end of easy money policies, and the start of a tightening cycle.

NO FED RATE HIKE

"Won't they!" The Fed decided to hold off on raising the Fed Funds rate at today's meeting. The move would have been more symbolic than material. Any move would have been limited and would only been a statement move that "liftoff" has begun. Today's non-action puts that off for at least another meeting, which is in October.

Was This the Right Decision

"What is the Fed afraid of?" If the U.S. economy is as strong as Yellen repeated it was over and over in her post meeting press conference, what is the Fed obsessing over? According to Yellen's comments, China's economy and market volatility influenced the Fed's decision not to raise rates at this meeting. So has the Fed introduced an additional factor in their decision making process? On the surface it appears that is what they have done. If the Fed has introduced an additional consideration, it complicates the proper equation to make policy decisions going forward. If different metrics can be introduced regarding policy decisions, it makes anticipating Fed moves nearly impossible and hinders the Fed's desire to be more transparent in its decision making process. Unfortunately, the Fed has introduced more uncertainty in to an uncertain environment and market volatility is likely to continue. Now investors get to continue to game the Fed.