Though there are a few fractures, the Federal Reserve's foundation against rate hikes remains pretty much intact.
A summary from the July Federal Open Market Committee meeting shows that there are some central bank officials who are ready to resume the tepid tightening policy begun in December that marked the first rate increase in more than nine years.
However, those looking for action anytime soon will be disappointed.
Understanding why requires peeking through the exercise in language ambiguity that the central bank uses.
A neophyte could look at last month's minutes and quickly jump on a statement that "some" members indicated that the economy had improved enough for the Fed to approve a quarter-point hike either at the July meeting or sometime "soon," ostensibly the next FOMC gathering in September. Specifically:
[S]ome other participants viewed recent economic developments as indicating that labor market conditions were at or close to those consistent with maximum employment and expected that the recent progress in reaching the Committee's inflation objective would continue, even with further steps to gradually remove monetary policy accommodation. Given their economic outlook, they judged that another increase in the federal funds rate was or would soon be warranted, with a couple of them advocating an increase at this meeting.
In the world of Fedspeak, though, "some" resides at or near the bottom of the Fed collective-noun food chain, just above "a couple" or the dreaded "one," and about on par with "a few." "Some" is a notch below "several," distinctly inferior to "many" and in another time zone from "most."
Hence, all you need to know from the July FOMC minutes:
With inflation continuing to run below the Committee's 2 percent objective, many judged that it was appropriate to wait for additional information that would allow them to evaluate the underlying momentum in economic activity and the labor market and whether inflation was continuing to rise gradually to 2 percent as expected.
Reading further through the minutes shows a continuing battle between "some" and "several" on inflation, "risks to the outlook" and general economic data, including threats from abroad such as Brexit. "Many" shows up only four times, and only once really as a matter of consequence, in the aforementioned sentence.
Taken as a whole, then, Chair Janet Yellen is keeping the hawks at bay and the Fed on a course of loose monetary policy, including the current 0.25-0.5 percent range. That's even despite some clamoring from those wanting to hike, a group that includes Kansas City's Esther George, the only FOMC member to vote against staying put.
And despite some initial chatter about "some" wanting a rate hike, the market quickly adjusted its sights. Government bond yields, which should rise on a hawkish Fed, fell considerably after a quick jump. The two-year yield, which is the debt instrument most susceptible to Fed action, spiked to 0.77 percent immediately after release of the minutes, but then dropped to 0.73 percent, on the day a net decline of 0.016 percentage points. The U.S. dollar, which also should rise on the prospects of a rate hike, was broadly lower against its global peers.
As for the Fed funds futures market, where traders bet on where the central bank's target rate will be, the chances of a hike this year actually fell. Though the probability for a December hike edged above 50 percent on comments Tuesday from New York Fed President Bill Dudley, the market now expects no rate hikes in 2016. December's chances are 46.7 percent, while the next most likely month for a hike is March 2017.