The Fed is still poised to raise rates this year, potentially becoming the only major central bank tightening policy, at a time when others, including the ECB, are moving in the opposite direction. Bobbi Rebell reports.
The European Central Bank has made its move announcing expanded measures to stimulate the region's sagging economy. But now that is raising questions about whether that will impact how the U.S. Fed approaches its own policy, especially an upcoming rate hike, generally expected as early this spring. Wayne Kaufman of Pheonix Financial Services says that hike is off the table for now. SOUNDBITE: WAYNE KAUFMAN, CHIEF MARKET ANALYST, PHOENIX FINANCIAL SERVICES (ENGLISH) SPEAKING: "I don't see how they can really move it up. I don't see how they can do that while the global economy is in a funk. Its a tough call for the Fed." But some disagree saying the Fed will stay on its rate hike timetable for spring, given the strength of the domestic economy. IHS Global Insight's Paul Edelstein: SOUNDBITE: PAUL EDELSTEIN, CHIEF U.S. FINANCIAL ECONOMIST, IHS GLOBAL INSIGHT (ENGLISH) SPEAKING: "I think, at the moment, they're probably going to move in different directions, but they're never going to take their eye off each other. I mean, the U.S. economy looks remarkably different from not just the Euro zone economy, but a lot of the Asian economies as well, and that gives the Fed a lot of scope to diverge from its overseas counterparts and start to raise interest rates sometime this year. " Another alternative - stick to the rate hike, but on a delayed schedule, says Loomis Sayles Dan Fuss who says, and make no mistake, the Fed is closely watching the global picture. SOUNDBITE: DAN FUSS, CFA, CIC, LOOMIS SAYLES (ENGLISH) SPEAKING: "It's not in their mandate. They have put it in the minutes, however, that the committee considers the international situation, I think twice last year." The Fed's next two-day meeting begins next Tuesday.