In a move that was telegraphed for weeks, the Fed did nothing to interest rates. There has been concern that a lowering of interest rates in light of the “subprime mortgage crisis” was necessary to stop a housing market implosion. Not likely: the Fed wanted to get those excesses out of the monetary system, and they do not want to reward bad lending behavior. They were obviously not concerned enough to raise rates at this time. With a softening economy, it would be hard to raise rates despite the Fed's expressed concerns. Raising rates would spook the markets. While fear of risk is a good thing, being paralyzed by risk is not the mood the Fed wants to create. The Fed's inability to get the long end of the yield curve to rise as short-term rates were being pushed up is a contributor to the problem, since those longer term rates affect many mortgage rates. The rates were low because demand for those securities has remained fairly high.

As I've mentioned before, conflicting economic data is a sign of slow and uneven growth, a sideways moving economy that frustrates so many businesspeople.

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