Two weeks ago, I argued that a Federal Reserve decision to raise rates in September would be a serious mistake. As I wrote my column, the market was assigning a 50 per cent chance to a rate hike. The current chance is 34 per cent. Having followed the debate among economists and Fed governors and bank presidents I believe the case against a rate increase has become somewhat more compelling even than it looked two weeks ago.

Five points are salient.

First, markets have already done the work of tightening. The US stock market is worth $700bn less than it was two weeks ago and credit spreads have widened noticeably. Financial conditions as measured by Goldman Sachs or the Chicago Fed index have tightened in the last two weeks by the impact equivalent of more than a 25 basis point tightening. So even if resisting inflation required a 25bp tightening as of two weeks ago, this is no longer the case.