Fed’s Evans Unlikely to Support Rate Increase Until Middle of Next Year, at …

29 Sep 2015 | Author: | No comments yet »

Fed officials speak, and investors scratch their heads.

The flurry of opinions following the Federal Reserve’s decision to hold interest rates near zero at its September meeting has done little to provide clarity on future interest rate policy, market watchers told CNBC on Monday. “I think they’re trying to be transparent — which you can’t argue against transparency — but there is such a thing as an overload of information, and I think that’s what a lot of investors are getting right now,” Robert Luna, Surevest Capital Management CEO, told CNBC’s “Power Lunch” on Monday. Market watchers got another opinion to mull over on Monday after Chicago Federal Reserve President Charles Evans said in a speech the United States faces inflation and dollar headwinds that may not subside until the middle of next year.

Earlier in the day, New York Fed President William Dudley said the central bank’s policymaking committee would likely raise interest rates this year, perhaps as soon as its next meeting in October. That comment echoed a speech by Fed Chair Janet Yellen last week, during which she said it would likely be appropriate to raise rates sometime this year. In her statement after the September meeting, Yellen said the Federal Open Market Committee wanted to see further evidence of labor market improvement and that inflation would move towards the Fed’s 2 percent target. “People are very panicked. Investors want to play it safe in an environment in which Fed members are sending mixed signals and walking back earlier comments, O’Neil Securities Director Kenny Polcari said. “Safe at the moment is to raise some cash,” he told “Power Lunch.” Stephen Guilfoyle, director of NYSE floor operations for Deep Value, noted that investors were moving into safe haven Treasurys and out of every equity sector, including utilities. “Usually they move well with Treasurys here, so right now you’re seeing some people protect their money.” Investors are focusing on “every little bit of data” available because the Fed continues to say that its decision to hike rates remains data-dependent, Kate Warne, investment strategist at Edward Jones told “Power Lunch.” That mantra, combined with the differing views from Fed officials, is not giving investors confidence. “I think the Fed needs to do a better job of communicating what it’s really planning to do as opposed to all the various options that different people think it might take,” she said.

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