Stifel's chief economist Lindsey Piegza talks with Bobbi Rebell about the Fed's decision not to raise interest rates, and the changes in their statement.
The Fed making no changes to its interest rate policy at the end of it cheating eating but there were some notable changes. In what they said about the US economy. And possible future policy changes here to break it down is Lindsey PH as his chief economist at C phone plus eight how things are happening. Are so what stands out in this statement what is new. Well there were a couple of things first of all as expected the Fed did downgrade their overall assessment the economy acknowledging the weaker pace of activity. So in March they said the economy was expanding moderately. They now lower that's out right slowed with a pretty big change but it expected given the fact we do expect Q1 GDP to come in well under 1%. How would you describe the tone and compared to previous statements and what does that mean for the market going forward. Well it was a little on the other side if you look just to that top line assessment but the Fed also backed away from the language that was really highlighting their concern. Of international events they've removed the international risk language and replace it instead. With a promise to continue to monitor events occurring abroad so. The Fed really yeah giving an opportunity for a June rate hike should domestic conditions continue to improve back to a more moderate level. So what are you that pain and less attention to what you think that will be watching. During that period in the next meeting in March they've really remained on the sideline because the improvement in the domestic economy had been off sex. By concerns what was happening in the international picture. Now they've backed away in terms of those concerns it's really going to be the domestic data that drives that policy decision. So again we see a rebound in consumer spending we see more favorable. Conditions in terms of business investment in the housing market. I think the Fed really is opening the door for a near term rate increase and what will this mean for the markets because to some degree in art has sort of had their focus shift its earnings in the near term we've had such drama. Especially from the technology sector will we see more focus on this or some sort of putting economics and fed policy decision. To the side while we focus on other things I think it is good to remain on the side at least in the near term memory there's quite a few weeks now between the next. Between the next meeting in June so. We're going to be sitting on the sideline waiting for more information but this does reinforce the committee's confidence. In the US economy in the US economy's ability to continue to maintain or at least gain. Momentum going forward that's that we are getting a big GDP report the advanced report. What are your expectations. We are looking for the GDP report to come in around point seven. So very weak and the third consecutive quarter of clearly waning momentum from that your 4% GDP report. In the second quarter of last year but again with a statement. Preemptively acknowledging a weakness in the first quarter. The Fed is sending the signal yes we're aware that we started out of the gate of the slow pace but we're confident that momentum will gain it. Markedly through the second quarter before that June apple and seeing me it will impact thank you so much and thanks for having me. I thank you Lindsey PH that's he's well I've got to repel this is Reuters.