The first few sentences of the Fed's post-meeting statement contain phrases like "firmer footing," "improving gradually" and "continue to expand." That's about as upbeat as the Fed has been in years.
But they also devoted plenty of ink to higher energy and commodity prices. While the Fed expects the effect on inflation to be temporary, they'll "pay close attention" to it.What remains unaltered is the Fed's pledge to continue with the scheduled $600 billion of bond purchases known as quantitative easing and "exceptionally low levels for the federal funds rate for an extended period." In other words, the Fed is no closer to raising short-term interest rates despite the more positive prose devoted to their economic assessment.On a different note, concerns about a full-blown nuclear disaster in Japan spurred more selling in world stock markets and Treasury securities are rallying. As a result, mortgage rates are retreating. Not sure how long that will persist as events are still unfolding, but we do get updated inflation data later in the week. If the nuclear situation in Japan stabilizes and there is anything at all alarming in the core inflation data, mortgage rates could move back up. But that remains to be seen.