Fed to Maintain Stance on Inflation, Analyst Says

Thursday, 28 Jun 2007 | 11:35 AM ET

David Sowerby, chief market analyst at Loomis Sayles & Co., told CNBC’s “Squawk Box” that the Federal Reserve will leave interest rates unchanged on Thursday while maintaining their concern about inflation.

Motley Fed Crew
A countdown to the Fed decision, with David Sowerby, Loomis Sayles chief market analyst, and CNBC's Rick Santelli, Steve Liesman & Carl Quintanilla

(“The Fed) is going to stand pat,” Sowerby said. “It would be very surprising to think would raise interest rates when real GDP (growth) is less than 1%. Sometime in early 2008, the next move will be an ease.”

He added that the Fed is “still going to talk tough about the concerns about inflation and that will be a main message today.”

The market anticipates no change. It expects the central bank to hold its benchmark interest rate at 5.25%, a level reached in June 2006 after 11 straight increases.

Long-term, Sowerby said he remains bullish. “(Stocks) will be the winning asset class over the next year,” he said.


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