The U.S. Federal Reserve was not able to pass a vote to raise interest rates last Wednesday. This is because three members voted the opposite way. This is the most opposition there has been for a vote in almost two years. Many people are claiming that this shows that there is a divide within the Federal reserve, as officials usually vote within the same line as Fed Chair Janet Yellen.
Wall Street is not happy with the Fed because of these conflicting views. Not knowing what to expect from the Fed is confusing investors. Some would like an increase in interest rate while some oppose it. Most of all however, investors just want to know what to expect. Because of these disagreements in the Fed, investment strategists aren't predicting a hike in interest rates until December.
While many believe that this divide in the Fed is bad news, Yellen argues otherwise: "It's a very good thing that the Fed is not a body that suffers from group think". Most of the statements that Yellen has made recently are to push back criticism that the Fed is receiving, but maybe it does deserve some bad press. The Fed has been talking about raising interest rates for a very long time now, and investors are getting tired of having to guess whether that is the truth or not. If anything, the Fed just needs to be more consistent with what it releases to the public about future policies.
http://money.cnn.com/2016/09/22/news/economy/federal-reserve-divide/index.html?iid=SF_LN
The Fed's inconsistency between it's messages to the public, and the actual outcome of their decision making process is definitely something that frightens investors. With the failure to increase interest rates, There was a great bump in the stock market, and a lot of overbuying to come with that. Great caution must be taken when the Fed changes the interest rate. America's affect on the world interest rate is too great to just raise or lower the interest rate on public sentiment.
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