The Federal Open Market Committee released the minutes last week of its September meeting, and it was the same old story.
The Federal Reserve says it wants to raise interest rates but does nothing.
At its Jackson Hole, Wyo., summit in late August, Fed Chair Janet Yellen indicated that she thinks that the case for a fed funds rate increase strengthened during the third quarter.
However, the Fed didn't raise rates during its September meeting.
It has been quite clear that the Fed doesn't know what it wants to do, and the market isn't getting its hopes up.
The CME Group FedWatch Tool, based on the CME Group 30-Day Fed Fund futures prices, shows that the market is already assuming that the Fed will leave rates unchanged during the November meeting, and market participants are just pricing in a 9.3% probability of the Fed raising rates by 25 basis points.
However, the market is pricing in a higher probability of a rate hike during the December meeting. The probabilities of a 25-basis-point increase and of a 50-basis-point increase are 59.8% and 5.8%, respectively.
At its meeting last month, the FOMC indicated that some voting members have little patience left, in regard to whether the Fed will raise rates.
Some Fed voting members indicated that rates should rise "relatively soon," according to the FOMC minutes.
Again, this has been going on for most of the year: The FOMC leaves the door open for raising rates, but it doesn't give a time frame for when it will actually do so.
Hawkish FOMC members warned that labor markets could tighten substantially, and the delay in raising rates could cause economic problems. Consequently, if this occurs, the Fed would need to raise rates at faster rates down the road.
Although the hawks tried to sway some of the undecided FOMC voting members, the majority of the voting members indicated that the Fed still needed time to assess the inflation picture.
Fed voting members indicated that there was a "reasonable argument" for either raising rates in September or waiting for additional data.
This is one key point that shows that the FOMC is still undecided on what it wants to do. The FOMC could only decide on whether it wants to raise rates or leave rates unchanged and wait for additional data.
However, Fed policymakers agreed that the case for an increase strengthened and noted that there were very few signs of inflationary pressure.
The FOMC also said that policymakers should be cautious when raising rates so that the labor market can heal more.
However, the labor market is relatively strong, and unemployment is down.
For the week ended Oct. 8, initial jobless claims were 246,000, while the consensus estimate was 254,000. The downtrend of unemployment claims indicates the labor market is improving and that the Fed should raise rates next month.
Based on economic data, the Fed should have raised rates multiple times this year. However, the Fed has made excuses for leaving rates unchanged, from China's slow growth to global macroeconomic concerns.
However, these concerns and risks have been around for a long time, and it is unlikely that they will go away. Therefore, the Fed should only be focused on U.S. economic data, not global macroeconomics.
The Fed seems as if its more concerned about how a rate increase would affect the equity market.
The next FOMC two-day meeting is scheduled for Nov. 1 and 2.
However, with the presidential election on Nov. 8, there will most likely be heightened market volatility. Therefore, the Fed is unlikely to raise rates during that meeting, as that would increase market volatility.
A December rate increase makes sense, but anything could happen between now and then. If the economy shows signs of weakness, the Fed is unlikely to raise rates.
Additionally, if the market experiences a sell-off due to the outcome of the presidential election, the Fed probably won't raise rates. So everything has to align before December for the Fed to increase rates later this year.
This article is commentary by an independent contributor.