This week’s meeting of Federal Reserve policy makers will result in vigorous debate between the hawks and the doves, but likely no change in policy, according to Kristina Hooper, U.S. investment Strategist at Allianz Global. Hooper points out that over the past few weeks there has been a dramatic improvement in economic data, including solid reports on jobs and retail sales, leading to a better economic outlook for the second quarter and beyond. Hooper said the debate over how much the economy has improved will be countered by international concerns, such as whether or not Greece will reach an agreement to restructure its debt or default. Hooper noted both the IMF and World Bank have asked the Fed not to raise rates this year. She expects the Fed will not raise rates until September, which in her opinion would be a good time to do an initial liftoff of rates, followed by observation of how that impacts the economy and markets. Hooper believes the Fed is in a hurry to do the first rate hike, but not necessarily a subsequent increase. She said between this Fed meeting and the one in September, markets will be in a holding pattern, with some amount of volatility.
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