The Fed’s Looped Tape on Interest Rates

The Federal Reserve Bank in Washington DC

WASHINGTON, DC—Does anyone remember the hit movie Groundhog Day? The lead character, played by Bill Murray, was forced to live the same day over and over again. In the end he almost lost his sanity waiting for something new.

And so we turn to the minutes from the July meeting of the Federal Reserve’s Open Market Committee.  Like so many prior meetings, members agreed that interest rates must be raised. And like so many prior meetings, members were divided over when this should happen.  The Fed wrote in its summary of the meeting:

The committee expects that economic conditions will evolve in a manner that will warrant only gradual increases in the federal funds rate; the federal funds rate is likely to remain, for some time, below levels that are expected to prevail in the longer run. However, the actual path of the federal funds rate will depend on the economic outlook as informed by incoming data.

As the minutes suggest,  the doves and hawks  on the committee have not come closer to an agreement  and Chairperson Janet Yellen is more inclined to side with the doves.