Fed's Impact on Market Seen as Minimal

Glum housing data hasn’t seemed to depress a booming market, which prompts the question: Does the Federal Reserve matter? Market watchers Michael Darda, chief economist at MKM Partners, and Joseph LaVorgna, chief economist at Deutsche Bank, weighed in on “Morning Call.”

“I’m not saying the Fed doesn’t matter, I’m saying the Fed matters less,” CNBC’s senior economics reporter Steve Liesman suggested.

Darda echoed Liesman: “It comes to how high the Fed Funds rate needs to go to restrict liquidity and credit… And five-and-a-quarter simply hasn’t done it.” Yes, the Fed affects the market -- but the pause on interest rates hasn’t depressed liquidity, Darda said.

The market is up 20% year over year, and “we’re still in a booming global growth environment,” Darda declared.

LaVorgna agreed that the impact of Fed decisions may be minimal – but he disagreed with Darda’s forecast: LaVorgna expects housing and energy to weaken consumer spending this quarter.