Tags: Tomczyk | Fed | rate | economy

TD Ameritrade CEO: Economic Data Will Keep Fed on Hold Until at Least December

By    |   Monday, 27 April 2015 06:40 AM

Many economists expect the Federal Reserve to begin raising interest rates in September, but that's unlikely given the economy's sluggishness and miniscule inflation, says Fred Tomczyk, CEO of TD Ameritrade.

The economy expanded only 2.2 percent in the fourth quarter, and the Atlanta Fed's forecasting model puts first-quarter growth at just 0.1 percent.

As for inflation, the Fed's favored price gauge, the personal consumption expenditures price index, climbed only 0.3 percent in the 12 months through February, nowhere near the central bank's target of 2 percent.

"I think the Federal Reserve is going to wait until it's sure it sees the economic growth coming and sees better signs of inflation," Tomczyk tells Yahoo Finance. That means at least until December, he said.

To be sure, Tomczyk remains optimistic about stocks. He notes that TD Ameritrade's Investor Movement Index, which tracks the sentiment of retail investors, turned positive in March, after hitting a two-year low in February.

"It's still bullish, but I would call it cautiously bullish, not aggressively bullish like it was three or four months ago," he explains.

Meanwhile, former Federal Reserve Chairman Paul Volcker isn't worried about inflation trailing so far behind the Fed's 2 percent target. And Anthony Mirhaydari, founder of Mirhaydari Capital Management, thinks he has it right.

"I think it's fine. We haven't got much inflation, and people don't expect much inflation and that's a good thing," Volcker told The Wall Street Journal. blogs.wsj.com/economics/2015/04/20/chatty-former-chairs-turn-up-fed-policy-noise/ "I'm not somebody that worries about inflation being too low."

He had to essentially engineer a recession through tight monetary policy in the early 1980s to stamp out double-digit inflation.

As for Mirhaydari, "the good news is that there's growing evidence that Volcker's lack of concern is justified," he writes in The Fiscal Times.

"The economy and financial markets are showing signs of preparing for a resurgence of rising prices in the months to come." Rising wages could help boost inflation, Mirhaydari says.

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Many economists expect the Federal Reserve to begin raising interest rates in September, but that's unlikely given the economy's sluggishness and miniscule inflation, says Fred Tomczyk, CEO of TD Ameritrade.
Tomczyk, Fed, rate, economy
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2015-40-27
Monday, 27 April 2015 06:40 AM
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