Gentle Ben Disappoints Again -- Hints No Rate Cut Coming

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There is still a lively debate about the Fed’s next move on interest rates. One of our favorite Fed Watchers, Lou Barnes, says they’re going up -- the global economy is too frothy. CNBC’s Jim Cramer, arguably the first blogger who made a difference, says they’re going down -- the Fed has to worry about America First.

So what does Bernanke say? Today in South Africa he voiced some worries about inflation, which investors took to mean no rate cut, which is why stocks slipped.

Maybe more important, Goldman Sachs withdrew its forecast of rate cuts later this year, saying the decent news on job creation and unemployment takes away the case for cutting rates.

What does this mean for mortgage rates? If the stock market is right today, and Goldman is right, it means mortgage rates will get no help from the Fed, and are more likely to move higher than lower.

What is Bernanke saying about housing? It’s a problem but not a huge one: ‘The adjustment in the housing sector is still ongoing, and the slowdown in residential construction now appears likely to remain a drag on economic growth for somewhat longer than previously expected. Thus far, however, we have not seen major spillovers from housing onto other sectors of the economy.’ Read the whole speech here.

Comments? Insights? Staggeringly brilliant Fed analysis?
Photo Credit: Reuters