Wondering what the Federal Reserve means in its rate policy statements?

They're easier to understand now, in the era of Chairman Ben Bernanke, than they were when the more-obfuscatory Alan Greenspan ruled the roost. Nevertheless, a translation is helpful. The following is what the Fed said, and what it meant in plain English.

What the Fed said:
The Federal Open Market Committee decided today to keep its target for the federal funds rate at 5-1/4 percent.
Translation:
The Federal Reserve's rate-setting Open Market Committee kept the target federal funds rate unchanged at 5.25 percent.

What the Fed said:
Recent indicators have been mixed and the adjustment in the housing sector is ongoing. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.
Translation:
Signs about the health of the economy are pointing in different directions. There are too many houses on the market for too few buyers, which causes house prices to fall. Nevertheless, the economy seems likely to continue to expand at a moderate pace over coming quarters.

What the Fed said: Recent readings on core inflation have been somewhat elevated. Although inflation pressures seem likely to moderate over time, the high level of resource utilization has the potential to sustain those pressures.

Translation:
Core inflation is the measurement of how rapidly consumer prices are rising when you exclude food and energy, where prices tend to yo-yo. By the Fed's favored measure of inflation, the personal consumption expenditures price index, core prices went up 2.2 percent in 2006. The core consumer price index rose 2.7 percent in the 12 months ending in February. Both measurements are too high for the Fed's comfort. The central bank wants an inflation rate between 1 percent and 2 percent. Although inflation is expected to fall over time, the low unemployment rate could continue pushing prices up.
In the Jan. 31 statement, the Fed said, "Readings on core inflation have improved modestly in recent months ..." This statement strikes a tone of greater concern about inflation.