Way back in high school, my freshman algebra teacher told us about Zeno’s Paradox, which the Greek philosopher (Zeno, not my teacher) explained through the story of Achilles and the Tortoise. According to the story, the two were engaged in a footrace, but no matter how much faster Achilles could run compared to the tortoise, he could never quite catch up to him. Why? Because while Achilles could consistently halve the distance between himself and the slower-footed reptile, the gap between the two could be reduced fractionally an indefinite number of times, so, therefore, he could never catch up – theoretically speaking, of course.

I was reminded of that story when I read the media headlines about the release last week of the minutes of the Federal Reserve’s September 20-21 meeting. Once again, the Fed said it was almost, but not quite, ready to tighten monetary policy. This time, the Fed used the words “relatively soon” to describe the timing of its next rate increase, which would be the first one since last December.

“Several members judged that it would be appropriate to increase the target range for the federal funds rate relatively soon if economic developments unfolded about as the committee expected,” the minutes said. Also, those members – still the majority – who still wanted to “await further evidence” before voting for a rate hike said it was a “close call” in their decision to wait.

In other words, like Achilles chasing the tortoise, the Fed just keeps getting closer and closer to raising rates but just never gets to that point. Continue reading "The Fed Tease Continues - But For How Much Longer?" →