The Fed Stands Pat

Kiplinger writes that the "Fed Won't Ride to Housing's Rescue" as it keeps its eye on inflation. This concern stems from the Fed's belief that the economy may heat up during the second half of this year. The Federal Open Market Committee (FOMC) has conceded that the economy has weakened since it last met on Jan. 31, when it stated that housing had begun to stabilize. It more recently stated that "adjustment in the housing sector is ongoing", perhaps caught flat-footed by the unfolding subprime mortgage fallout. The Fed still isn't overly worried about the housing sector pulling down the broader economy. The Kiplinger article predicts that the 30-year fixed rate mortgage will increase from 6.1% to about 6.4% by the end of 2007.