It often appears that no matter what the Federal Reserve does, its actions are destined to draw the ire of market participants.
Now, it appears that what it doesn't do is at least as likely to ruffle feathers.
The recently released minutes to the Fed's September meeting showed the committee fretting about the sharp drop stocks had suffered over the past month. It was mentioned as a negative in the economic outlook prepared by the committee staff, and factored into the policymakers' economic outlook.
Those factors, along with several others, are widely seen as keeping the central bank from meting out its first rate hike in almost a decade.
"The growing debacle surrounding the election of a new Republican House Speaker and the potential crisis if Congress doesn't raise the debt ceiling within the next month are additional risks that have sprung up in the past couple of weeks," Capital Economics said in a research note last week. "Accordingly, we now expect the Fed to wait until early 2016 before beginning to raise interest rates."
However, the Fed's emphasis on downside risks is injecting a degree of uncertainty—and volatility—into markets, a factor not lost on global policymakers that are calling on the Fed to end its handwringing and begin the tightening cycle.
"In the United States, equity prices fall, on balance, amid significant volatility, and risk spreads for businesses widened," the Fed minutes note. "Many participants judged that the effects of these developments on domestic economic activity were likely to be small, but they acknowledged the risk that they might restrain U.S. economic growth somewhat."
The minutes go on to state that the stock drop was not a primary factor behind the Fed's widely anticipated decision to keep its interest rate target on hold.
However, it added that "participants indicated that they did not see the changes in asset prices during the inter-meeting period as bearing significantly on their policy choice except insofar as they affected the outlook for achieving the Committee's macroeconomic objectives and the risks associated with that outlook."
Still, it was clearly a factor lurking in the background, to the extent that the market drop has weighed on inflation expectations.