In the grand scheme of things the Fed will not cause too many ripples on the cosmic screen of economic life by moving forward with monetary policy normalization at this (September 2015) FOMC meeting or by delaying that move.
Size seems to matter in some aspects of life, and it certainly does in the financial markets. Super-size August movements in global stocks are but one sign that something may be amiss in the global economy itself – China notwithstanding. There’s the timing and the eventual “size” of the Fed’s “tightening” cycle that I have long advocated but which now seems to be destined to be labeled “too little, too late.”
Yesterday’s market weakness has been attributed to worse that expected economic numbers, particularly the extremely disappointing 0.2% GDP growth for the first quarter. This was much worse than the expected tepid growth of 1%.
The argument going into the today’s Federal Reserve’s FOMC meeting is whether or not the FOMC continues to use the “extended period of time” language regarding keeping Fed Funds extremely accommodative.