An inside look at Fed statement - pause in rate hikes, hawkish on inflation watch and soft landing expectation on real estate
Sam Adelton
Oct. 25, 2006

The Fed kept its rate steady. However the statements provide guidance for the future.

Essentially what they are saying is that they are pausing on rate hikes for now. They are open to future rate hikes if needed. Inflation is a problem though well contained for now. They are closely watching the price deflator and capacity utilization numbers. Fed expects a soft landing in real estate market. Although there are signs of problems in some regional markets.

The most important part of their decision making comes from their assessment of the manufacturing and service side of the economy. They are bullish on both manufacturing and service sectors. The leading indicator confirms their statement. That can translate to a rate hike several times after the election in November especially in 2007.

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