The U.S. Federal Reserve has indicated it will start raising rates from zero later this year as long as the economy continues to improve and unemployment falls further. Rockwell Global Capital Chief Market Economist Peter Cardillo expects the Fed to raise rates by 1 percent by the end of 2015.

SHOWS: NEW YORK, USA (JANUARY 2, 2015) (REUTERS - ACCESS ALL)

1. ROCKWELL GLOBAL CAPITAL, CHIEF MARKET ECONOMIST, PETER CARDILLO, SAYING:

JOURNALIST ASKING PETER CARDILLO: 'With U.S. markets ending the year with a bang, what factors can impact market performance in this short week of trading?'

CARDILLO: 'Well this week I don't expect very much and there is a good possibility that we could still top 21,000 on the DOW. Basically light holiday trading volume is probably going to be the essence of this market staying range bound and maybe just inching up a little bit.'

JOURNALIST: 'Great, and do you expect the rally to continue in the New Year?'

CARDILLO: 'I think so but I think it will be mostly in the smaller microcap to midcap sectors.'

JOURNALIST: 'What is the big wild card that could de-rail market performance?'

CARDILLO: 'Well I guess you know the real wild card for the market in 2015 the deflationary aspects of the euro zone. Russia continuing to fall in negative growth obviously that would weigh on global economic activity. Asia also slowing down, we see that with China most likely China is going to miss its target of 7.5 percent closer maybe to 7.1, 7.2 percent of gross domestic product. So that is going to weigh a bit on the global economy and that could derail stocks.'

JOURNALIST: 'Great, and lastly how about the Fed and its decision to raise interest rates, how might that factor in?'

CARDILLO: 'I think the market has pretty much discounted that the Fed is going to pull the trigger in the second half of the year. Now whether that happens in the second quarter or the third quarter I think it is pretty much discounted in the market. And I think the fact that the Fed has again mentioned patience in its last communiqué which basically can be interpreted in the fact that they probably are not going to be so aggressive in raising rates. Simply because there is no inflation and if the deflationary aspect continues to threaten the euro zone I think that the Fed is going to take that into consideration. They are definitely going to raise rates this year; it is just a question of whether or not they will be aggressive or less aggressive. My guess is that we are probably looking at perhaps 1 percent Fed funds rate by the end of 2015.'