US retail sales fell less than expected in February dipping by 0.1% compared with consensus forecasts for a 0.2% decline, the Commerce Department said. Markets did not celebrate, however, as attention was focused on the heavy downward revision to January’s sales data.

Originally reported as having increased by 0.2%, the number was revised downwards to a 0.4% decline rekindling fears that the US economy could be set to report disappointing 1st quarter 2016 GDP growth.

The news came as the Federal Open Markets Committee (FOMC) prepared to start a 2-day meeting at which it will decide whether or not to raise interest rates by another 25 basis points.

“The downward revision of January’s read will weigh heavily on policymakers,” said a chief market strategist at Mizuho Financial Global. “They could theoretically ignore poor manufacturing data because it only accounts for 12% of US GDP now but consumption is the lifeblood of its economy. Raising interest rates into a slowing economy will most certainly not go down well.”

The central bank is expected to leave the Fed Funds rate unchanged this month as it waits for signs of mounting inflationary pressures and tightening in the labor market.

Mizuho Financial Global is reiterating its view that monetary policy diversion between the Fed and the other central banks will not be able to continue with the global economy slowing.

“The global economy is far too inter-connected for the Federal Reserve to be tightening monetary policy when everyone else is easing. As long as the economic data keeps coming in like this, US rates aren’t going anywhere,” concluded Mizuho Financial Global’s chief market strategist.

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