China, a considerable factor in Fed's rate hike decision

Many participants saw China's effects on the US economic activity and inflation as small or transitory. Nevertheless, the FOMC decided that it was prudent to wait for additional information confirming that the economic outlook had not deteriorated and bolstering members' confidence that inflation would gradually move up toward 2 percent over the medium term.

Either the beginning of a more severe impact of the Chinese growth slowdown is only seen or US exports are less sensitive to China than feared. Now let's turn to business investment. A deteriorating outlook for export markets will, ceteris paribus, reduce the incentives for exporting firms to invest in their production capacity.

On balance, while recent data suggest that US GDP growth is being dragged down by the deteriorating global economic environment, there is still sufficient momentum in employment growth to push the various labor market slack measures down to the Fed's desired levels, supporting the Committee's confidence in the inflation outlook. 

"After all, the minutes of the September meeting show that the Fed sees the negative impact of the global turmoil on the US economy as temporary. With two more Employment Reports to go before the December meeting, a hike before the end of the year still cannot be ruled out, although the risks of a delay into 2016 have increased considerably in recent weeks", says Rabo Bank.