We Told You So: Fed More Worried About Inflation Than Housing

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Truthfully, we didn’t tell you so, our buddy Lou Barnes did last week, when he wrote that the Fed is more concerned about runaway global growth and inflation than the housing slump.

The AP confirms as much in its reading of Fed minutes released today: ‘Concerns about inflation trumped worries about the slumping housing market last month in the minds of Federal Reserve officials,’ Martin Crutsinger writes today.

Portfolio.com reads it the same way: ‘Fed watchers will translate this verbiage into ‘We’re not about to lower rates.’

The Fed is oddly surprised by the housing downturn. We say ‘oddly,’ because we don’t see any surprises -- we continue to witness a steady worsening of the housing sector, which has been going on for quite a while. We’re not sure what the Fed expected -- a Spring Rebound?

More from AP: ‘Fed officials said the downturn in housing was turning out to be more severe than expected ... Bernanke and his colleagues did express the view in the minutes that the slump in home sales and construction that began last year would last longer than had been expected... ‘The correction of the housing sector was likely to continue to weigh heavily on economic activity through most of this year, somewhat longer than previously expected,’ the minutes said.’

More: ‘There also were worries that the impact of housing, which has contributed to a significant slowdown in economic growth over the past year, could grow worse if falling house prices began to crimp consumer spending patterns.

‘Participants remained concerned that the housing market correction could have a more pronounced impact on consumer spending than currently expected, especially if house prices were to decline significantly,’ according to the minutes.’

Thoughts? Comments?
Photo Credit: Reuters