You're watching...
Ward McCarthy, Jefferies chief financial economist, gives his predictions on how the Federal Reserve will handle the potential for QE3.
Also in this playlist...
Auto-advance: ON
Auto-advance
This transcript is automatically generated
-- -- thank you very much for joining me what are you expecting with regard to comments from mr.
Bernanke on QE3.
Well I'm quite sure he's going to be asked about a -- you.
Three and I think his answer will be that it still on the table.
That -- chairman Bernanke is not particularly comfortable with the improvement in the labor market and with the economy slowing down over the last number of weeks.
I think that's probably even making him a little bit more uncomfortable.
That we're not going to see the type of labor market improvement that he would like to see.
And -- which -- live look interest rates are gonna stay low until probably late eighteen to 2014.
There are other people.
Who don't have a vote that say they should be.
Raising -- those rates in the nearest but you believe the mr.
Bernanke says we'll just kind of touch.
Carry over the same line he has for some time now.
Talking about that horizon of late 2014 the full rates could rise.
Well -- that's that's right -- at least as far as the the policy statement is concerned tomorrow the Fed's not going to change the the calendar reference of the rate guidance tomorrow and -- they're also not going to change what they're doing with the balance sheet.
What I think the most interesting part of tomorrow will be after the policy statement.
Specifically at 2 o'clock when the Fed will release its revised forecasts.
And I think that could be a period of about fifteen minutes.
Into the press conference that will be very confusing for market players.
Because it'll be difficult for us to figure out what exactly is the Fed trying to tell us.
Well is that big pot because ward it's difficult to tell find out what the economy is telling -- we get good news on the one hand but and we kind of take a step -- on the other.
What we had a very good first quarter or at least two thirds of the first quarter and they in the improve and actually began late in 2011.
But as we progressed into march and in some of the April data that we've seen the data has had a little bit of a softer tone.
So the economy is okay I -- will grow two point 8% in Q1 I think we will have brothel about 2% in the second quarter.
And then gradually grow a little bit faster as the year progresses.
But we are definitely hitting a little bit of a soft patch here but it's nothing even remotely is difficult as the soft patch we hit last year.
Well and and with that in mind -- -- some -- and some analysts -- you know the generic analysts who believe that there -- underestimating.
The strength of the economy than inflation although hasn't been an issue now is just around the corner.
Well I don't think inflation is around the corner I do think we can have an inflation problem.
Three to five years down the road at least and you look at -- at a from a monetary standpoint.
But what to -- is interest thing is that we have seen inflation decelerate since last September.
Including the most recent inflation numbers.
Despite the fact that we had a period of time -- oil and gasoline prices spurted higher so we do not have an inflation problem now.
While very interest thing ward McCarthy -- Jefferies all will be revealed tomorrow wolf thank you for joining us today may give and by the way tune in tomorrow for live coverage of Ben Bernanke's press conference starting at 2 PM.
