FOMC Cautious About Future Rate Cuts
20 February 2008
Bonds were up today, despite stronger than expected CPI, taking back much of yesterday’s losses.ﾃつ Rates were up around 50 basis points this morning but should be lower tomorrow morning.
The Consumer Price Index came in higher than expected, which is bad news for mortgage rates as it means prices at the level of the consumer are increasing, a key component of inflation.
January Housing Starts also were reported today, but there was no significant change over expected levels and they did not affect trading.
FOMC minutes were released this afternoon and showed that the Fed will consider any future rate cuts with much caution to inflationary pressures, despite the sagging housing market.ﾃつ The Fed has cut rates twice in January, but despite this fact rates are higher today than they were in December, and credit policy tighter.ﾃつ ﾃつ ﾃつ At the same time, inflation is a real threat.
Tomorrow we’ll see the Leading Economic Indicators from the Conference Board, a report which attempts to forecast future economic activity.
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