×

What Markets Should Expect From the Fed: Top Economist

As the Fed concludes its two-day meeting, most on Wall Street expect interest rates to remain low for the immediate future. But will that cause asset bubbles in stocks, real estate and currency markets? Beth Ann Bovino, senior economist at Standard & Poor’s, shared her outlook.

“We are concerned that there is certainly a lot of liquidity that’s out there and a lot of cash that’s going into few items and it’s pushing prices higher,” Bovino told CNBC.

“The Fed is going to be concerned about that, and given the numbers that are coming out—the economic indicators are starting to show some promise."

Bovino said the Fed may be forced to change the statement "a little bit." And while the current Fed statements indicate that the economy is seeing signs of a recovery in process, it could "turn around on a dime," she added.

“So the Fed may change the extended period of time, that's something that markets are probably too optimistic about—they may change it to 'sometime'—mainly to appease the hawks," she said.

"But inflation is relatively tame near-term, so they do have some room to move.”

More Perspectives on the Fed:

CNBC Data Pages:

______________________________
CNBC Slideshows:

______________________________

______________________________
CNBC's Companies in the News:

Citigroup

Berkshire Hathaway

Goldman Sachs

Fannie Mae

  • Buffett Joins Goldman Bid for Fannie Mae Tax Credits

Merck

Schering Plough

  • Merck Closes Schering Buy, Set for Future Deals

______________________________
Disclosures:

No immediate information was available for Bovino or her firm.

______________________________

Disclaimer