Federal Reserve Made Mistake Raising Interest Rates Last Year

The Federal Reserve's historic rate hike last December was unwarranted, and one economist expects the central bank to 'cherry pick' economic data in order to justify its second rate hike this year. 'I think the second rate hike comes in September or December - within the bounds of 2016,' said Lindsey Piegza, chief economist at Stifel Fixed Income, adding that the data doesn't yet justify such a move, but the Fed will defend its looming rate increase by focusing on the stronger economic reports. 'I think it's very clear that the Fed did make a policy mistake back in December,' she said. 'It was clear the data was not strong enough for liftoff and that move was in anticipation of further growth down the line, which we have not seen.' Piegza said the Fed is volatile. 'They continue to bid up market expectations and pull that away from us,' she added. The takeaway for investors is lower rates for longer, according to Piegza. 'It's very clear that gradual is not one rate hike every six months - gradual might be one rate hike every 12 months,' she said, referring to the central bank's frequent use of the term 'gradual' to characterize the trajectory of rate increases going forward. TheStreet's Scott Gamm reports from Wall Street.