Federal Reserve Meeting

The Federal Reserve had their final meeting of 2006 on Tuesday December 12. The result was the US benchmark interest rate remaining unchanged at 5.25%. The Fed cited the cooling of the housing market substantial, predicted a moderate expansion and called recent economic idicators mixed. Inflation topped the list of concerns for Bernanke and members of the Fed who are counting on the economy slowing enough to cool inflation.

At years end the economy has slowed from Feb 2006, when Bernanke replaced Alan Greenspan, The jobless rate dropped to 4.5% from 4.8% at the beginning of Bernankes term.

Trader speculation has the Fed cutting the benchmark interest rate at the May 9, 2007 meeting if not sooner.

Economists speculate the Fed is in a holding pattern due to inflation concerns.

Policy makers seem to be waiting for holiday season shopping results, which would gauge whether the housing and auto sales decline would spill over into the broader economy. Consumer spending accounts for nearly 70% of the US economy.

Mortgage Rates (as of December 14, 2006 5pm eastern time)
15 yr Current- 5.40% Previous month- 5.49%
30yr Current- 5.63% Previous month- 5.76%
1yr ARM Current- 5.29% Previous month- 5.34%

Source www.bloomberg.com

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