3 Very Different Reactions To The FOMC Rate Decision

Joe Brusuelas

McGladrey Chief Economist Joe Brusuelas noted that, while the Fed modestly boosted its growth forecast for 2015, it trimmed its 2016 and 2017 estimates on the back of the "slowing in the external sector primarily associated with challenges in China and Emerging Markets."

A majority of the FOMC prefers higher rates for 2015, "a series of modest hikes next year has not materially changed the rate path outlook," he added. "What was noticeable is the reduction by roughly 50 basis points where the committee expects to be in 2017. In my estimation the Fed is not ensnared along the zero boundary and as the economy continues to improve, the central bank will kick off its rate hike campaign. The Fed’s liftoff may be delayed by global financial turmoil but it will not be denied," Brusuelas concluded.

Peter Schiff

Peter Schiff, CEO and chief global strategist from Euro Pacific Capital, released a statement titled "Still Waiting…"

"Once again the Fed's bite has failed to live up to its bark," he stated. After "months of expectations that it would finally raise rates for the first time since 2006, the Fed continued to sit on its hands while pointing to some unspecified date in the future when all the economic and financial stars will align in a way that makes a 25 basis point increase appropriate."

He asked, "Am I the only one getting bored by the repetition?"

Related Link: One Fed Banker Thinks Interest Rates Should Be Negative Until 2017

Regarding the outlook of economic growth and stability painted by the Fed, Schiff commented, "The Fed, and the rest of the economic establishment for that matter, continues to ignore the steady torrent of negative data that reveals a slowing economy.

"Today's surprisingly dovish statement was notable for the introduction of ‘international developments’ as an ongoing input into the Fed's rate deliberation process. To many, this refers to the current uncertainty in China. But, in reality, this shift offers the Fed a gallery of new excuses to choose from to explain away its failure to raise rates down the road. Now weakness at home and abroad is sufficient to keep the Fed on the sidelines. The last thing we needed was more excuses," he added.

Schiff continued, "Rate hike talk from the Fed is just a bluff to disguise its inability to tighten, as even small increases could be sufficient to prick the biggest bubble it has ever inflated."

Tara Sinclair

Tara Sinclair, chief economist for the job site Indeed, said this decision is one employers and job seekers should be celebrating. "The Fed's decision to hold off on a rate hike gives the U.S. economy a bit more time to hit a stronger stride," she expounded. "It is true that we may be near full unemployment in the U.S., but by keeping us at the zero-lower-bound a little longer they are giving businesses more time to spend and incentivize workers to get off the sidelines.

"The decision to wait also gives some hope that the Fed does not believe we have reached a new normal for the U.S. labor market, in which wage growth is relatively low and labor participation bumps along historic lows," Sinclair added. "In the end, even if we don't see huge growth before they do eventually raise rates, this choice gives the economy more chance for growth and prevents us from wondering 'what if' they'd waited a bit longer."