Why the Fed won't raise rates this week

Financial markets around the world have been pregnant with anticipation over the Federal Reserve's first move to normalize interest rates, which some believe to be delivered this week.

Hospital waiting room
Charles Gullung | Getty Images

Some economists are suggesting the Fed will give birth to that rate increase or possibly twin moves — one to raise the federal-funds rate by a quarter point, and two, to raise interest paid to banks that hold their excess reserves at the Fed by a quarter point.

Investors have been pacing in the waiting room, like dawdling dads in 1960s TV shows — think Ricky Ricardo, or Rob Petrie, fumbling about as if they'd never seen a baby before. Recall back then, they were not allowed in the delivery room, wondering anxiously what the outcome will be. Given the Fed's confusing statements, of late, on the timing of a rate hike, it's no wonder the nervous pacing has intensified in recent weeks. You can't go in to the Fed and watch that process either!

Let me propose a new guide for nervous investors fretting about their first offspring in over a decade.

I call it, "What Not to Expect When You're Not Expecting."

I don't believe the Fed will raise rates this week — let's call it a pregnant pause in their anticipated due date.

While the Fed may raise rates in October or December, the world has given the Fed ample reason to hold off a little longer.

Turbulence in global markets, rapidly decelerating growth in China, the world's second largest economy, currency chaos in a quite a number of emerging market nations, all lead to a risk that a rate hike would simply exacerbate those recent, and troubling, trends.

While it's true, the rest of the world does not figure into the Fed's dual mandate of maximizing domestic employment while keeping prices stable, those concerns become issues when they affect the outlook for both global, and domestic, economic growth.

When taken alone, even domestic considerations give the Fed reason to pause. It is true that the jobs market is causing some labor pains for the Fed, as the unemployment rate hovers at multi-year lows, job openings are nearing six million, and there are some concerns that wage pressures are beginning to gestate — though that remains to be seen.

More important is that the Fed's inflation target of two percent has not yet been achieved. Despite claiming that low inflation is "transitory," by all measures, the target has been missed for nearly six years. Even after deflation ceased to be a troubling toddler, there has been no further development on the inflation front, and none appears likely anytime soon.

Inflation growth has been stunted by both supply, and demand shocks, driving the price of commodities to multi-year lows, from crude oil to copper.

Investors want the Fed to put a little Pitocin (a drug used to induce labor) in their plans to speed the delivery of the first rate hike. The "get it over with" crowd is vocal, but the bond market appears content to wait for a more natural delivery.

Fed-funds futures, which anticipate movements in interest policy, are suggesting a 75 percent chance that the Fed's due date has been pushed off to October, or more likely, December — a Christmas baby, if you will.

The bond market has proved most prescient when predicting due dates, so I will accept their prognosis that this baby is coming, but we'll just have to pace in the waiting room a little longer for what some believe will be the Fed's crowning achievement after six years of planned parenthood.

Commentary by Ron Insana, a CNBC and MSNBC contributor and the author of four books on Wall Street. Follow him on Twitter @rinsana.