Although Yellen used the word “we” a lot in her press conference yesterday, it’s clear the Fed is being ripped apart by dissent and the urgency for action now, rather than later. In a vote of 7-3, a majority of the Federal Open Market Committee (FOMC) members agreed to hold rates steady for now. Within the monetary policymaking committee, there was a general agreement that a rate hike could happen immediately; however, Yellen commented that such a move wouldn’t be “sensible.”

Sensible might be the word of the day, considering the inordinate amount of time spent on talk of the economy overheating.  The Fed’s own forecast doesn’t look like the stuff of overheated economies of the past. The 2.0% inflation rate wouldn’t happen for another 15 months or more. The newfound sense of urgency is just as puzzling; the Fed lowered its 2016 Gross Domestic Product (GDP) projection to 1.8% from 2.0%.  How can they see an economic momentum and model for slower growth?

This means the second half growth could be less than three percent each quarter; otherwise, assuming a 3.0% plus growth in the current quarter. The U.S. economy could limp out the final three months of the year with an unimpressive growth.

There were plenty of good questions about the Fed and its political pressure not to hike interest rates. So, this is worth keeping in mind for the November FOMC meeting in which Yellen is deemed to be “live.”  What happens if the economy doesn’t catch fire?  The Fed continues to point to two areas that remain stubbornly low:

• Business Investment
• Inflation

What happens if businesses don’t step up to the plate?  I think it’s time for Fed-watchers (which should include all investors, although there is a big difference with respect to obsession and awareness), to consider there might not be a rate hike for a very long time.  Consider the three dissenting voters: two hawks (H) and one dove (D) will not be voting members in 2016.

FOMC Permanent Voters

2016 Voters

2017 Voters

Without Dissent

I am sure as the session moved on the consensus Wednesday; the Fed would be on hold until December. However, I bet a few investors began looking at the future composition of the Fed with the understanding they will not aggressively hike rates, and the path to normalization will be long and winding.  Of course, there are still wildcards like Yellen’s hold on members and possibly a President Trump, putting someone else in charge; although I have a funny feeling he wouldn’t be as keen to see higher rates under his administration. 

#Justsaying