Minutes confirmed my preliminary assessment after the statement and press conference: "The Fed has not materially changed the outlook, neither the balance of risks, but has acknowledged an increase in uncertainty. And if one is not willing to show this uncertainty in the forecasts, you show it by lowering the 'dots' when your forecast suggest otherwise, and sound dovish".

Main takeaways from September minutes:
  • Decision to be on hold explained:
    • All but one member agreed developments over the intermeeting period had not materially changed the outlook.
    • But, "in part because of risks to the outlook for economic activity and inflation" they decided it was prudent to wait for additional information to bolster their confidence on inflation returning to target.
  • Wait a minute: didn't they write that the balance of risks had remained unchanged?
  • But the minutes make it clear: The balance of risks has not changed. But the risk of risks has! (in other words, uncertainty) - This was the missing information in the statement and press conference...(see Frank Knight for the difference between risk and uncertainty).
  • Members agree that unemployment rate is at a level "quite close to" NAIRU.
  • Not quite there yet:
    • many members think labor market conditions met or would soon meet one of the Committee's criteria for liftoff.
    • but some members indicated confidence on returning inflation to target had not increased (because global economic and financial developments)
  • Most members need to see growth to "continue to expand at moderate rate" and labor market conditions to "improve further" for them to increase their confidence on inflation returning to target.
  • So when to move?
    • Many members expect conditions to be met later this year.
    • But several members were concerned about downside risks to growth and inflation.
    • A couple of members expressed unease with decline in market-based measures of inflation compensation. (Yellen seems to be one of them, based on her remarks in the Q&A)
  • Yellen seems to be on the very dovish side of the debate. And she's the boss.
  • Some of the comments that the September decision had been a 'close call' were not evident in the minutes. At least among voters (Williams included), all but Lacker easily agreed to wait for more information.
  • Meeting-by-meeting and data dependency continues to hold...