“Expectations that the Fed will raise rates in September or even June are off the mark,” said Dick Bove, equity research analyst at Rafferty Capital Markets. “The dollar is simply too strong. It’s having a significant impact on the earnings of international companies across the board and it’s having an impact on the trade balance.”
If the Fed were to raise rates, Bove believes the downward spiral would be severe. “Trade balance would grow more negative, international companies would lose money overseas, jobs would be lost in the U.S. and the growth of the economy in the U.S. would slow down.”
Therefore he thinks the Fed will feel compelled to err on the side of caution and keep rates low.