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FBN's Fed panel Michael Cox, Doug Cote, Sharon Lee Stark, Phil Flynn and Nicole Petallides weigh in on the Fed’s decision to leave rates as they are...
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-- -- Well that that is leaving rates unchanged no surprise there but what is moving markets as the Fed's indication that they will keep rates rates at exceptionally low levels.
At least through 2014.
Joining us now to weigh -- is Michael slowly he's the chief economist at JPMorgan Chase thanks so much for joining us.
You -- economists on the Federal Reserve board from 2002 to 2006.
Does this guidance surprise you is this what you're expecting.
This is a little more dovish than we were thinking.
We were expecting that they would not.
Indicate that there were gonna raise rates any time soon but wait 2014.
It's probably a little one and other -- of what we are anticipating I think this does raise the possibility that.
At 2 o'clock when we get the committee's forecast of their individual.
Projections for the funds rate that may be most won't see the first rate hike actually until.
12015 because again remember the said at least through late twenties late 2014 so this is actually.
A little more on the accommodative side than we had been expecting himself you know once again Bernanke.
Continuing.
To surprise us by how can.
You know how how focused he is on getting growth going again I'm so little more dovish than we were looking for what piece of data do you think they're seeing that is most troubling.
That's a good question yes certainly over the past few weeks the market has been getting bit more enthusiastic about growth there was really no change in the description economy between.
This statement and the one from early December so.
I don't think it's any one thing in particular -- hasn't scared I just don't think there are all that impressed by what we're seeing lately and the data.
And it also seems like they're still not convinced that the Europeans have there their act together they're still was that.
-- statement that strains in global financial markets and pose a significant downside risk on the US economic outlook so.
While there has been better.
Better tone in the markets regarding Europe they still seem pretty concerned that that problems not completely behind us.
Our -- -- -- pushing back the timeline for raising interest rates they're gonna continue with their mortgage principal reinvestment program that's already.
In effect is this wash out any.
Additional stimulus any additional money printing if you well that had been talked about in the weeks leading up to this meeting.
I don't think this eliminates.
The possibility of getting more kiwi later on this year I think we've I still think we would need to see a disappointment -- -- growth.
Or bigger decline in inflation to get more stimulus.
In the form of more -- Our expectation is that that probably won't take place there is some political cost of course -- doing more QE.
But I think yesterday's statement shows us for -- you don't wanna underestimate his -- his resolve to get the economy growing again.
I guess the big question is though do you think it's gonna how.
Well I think of the marginal that'll help certainly party scene today that interest rates have come down now there is the point that interest rates are already very low.
But certainly going raining out -- up activity I -- you don't see as much lending his people would like to see -- mean there's all the same complaints out there about the economy how is keeping rates lower even longer gonna make a difference if it hasn't helped that much already.
Right so there -- whole lot of issues that are.
Affecting the economy outside of interest rates confidence.
Policy uncertainty.
Foreign developments the Fed can't control and -- that -- what -- can control it's gonna trying to push in a more common direction so.
Will the result need of the economy grows -- -- and Steve.
Now but the Fed has certain deal with the instruments that has and acetate that instruments the policy decisions it.
It can't as a given so I think it's doing what -- cannon and leaving.
Leaving aside what it can't resolve.
This additional transparency Michael will help every eight people in making average financial decisions and this is really -- make a difference in our and a and -- and -- quality of life.
Com.
-- when he I don't think for most consumers and households it will affect other financial planning all that much.
It's possible for for businesses.
It can affect their financial plan and I think having the certainty over.
Where interest rates not certainly but at least some guidance -- where interest rates are going.
Should help someone.
Any concern about deflation I had read that that's the main indicator that that'll be watching in terms of whether or not to.
Institute another QE2 Q3 rather.
Right right.
You know -- not all that worried about deflation here certainly -- services prices have stabilize and if -- picked up a little recently.
I think there is a concern that.
You know with the dollar strengthening with come -- commodity prices falling that you could see core goods prices fall.
Further which would lead to deflation but I think that's.
Still -- pretty minimal risk and you know the Fed is not indicating a very heightened concern with.
Deflation of course you know what if we get a big problem bigger problem you her.
That could pull the global economy into a position where we may have to worry about that but right now that doesn't seem to be a primary concern about their -- -- the -- Right Michael Crowley thanks so much for joining us -- --
