Are the markets misreading the Fed?

Federal Reserve Board Chairman Ben Bernanke poses in the board room of Federal Reserve headquarters Friday, Jan 26, 2007, in Washington. Bernanke and his colleagues gather Tuesday, Jan. 30, 2007, for a two-day meeting to discuss what is needed to keep the economy on track and improve the central bank's communications with Wall Street and Main Street. (AP Photo/Manuel Balce Ceneta)
Manuel Balce Ceneta
Federal Reserve Board Chairman Ben Bernanke poses in the board room of Federal Reserve headquarters Friday, Jan 26, 2007, in Washington. Bernanke and his colleagues gather Tuesday, Jan. 30, 2007, for a two-day meeting to discuss what is needed to keep the economy on track and improve the central bank's communications with Wall Street and Main Street. (AP Photo/Manuel Balce Ceneta)

"No – the Fed will resort this time not to inflation pressures, but to mortgage lending pressures. Lower interest rates – create subprime lending indirect - inflation. Fed Interest: Squash practices by INCREASING RATES cap-indirect inflation. Could come in faster than most people expect." -- Sebastian P.

"Hi. I didnt know we had to 'interpret' the Fed, given its high degree of transparency, we all know what he means, don't we?" -- Anders, TX

"Since mid Febuary, the stock market has been acting like a submarine with a screen door. Since the price of gas and food doesn't factor into the cost of living, the Fed will do just the opposite of what they should do. They'll raise rates." -- Bob D., Maryland

"The markets are doing exactly what the Fed wants them to do. Bernanke realizes that rate cuts may be necessary, but first he needs to quell any fears that his original objective is incomplete. He needs to slow his vehicle down first before putting it into reverse, and he believes the market interpretations got ahead of themselves last week. Simply put, odds of a summer rate cut should remain steady, but he will remain illusive until the moment is right." -- Scott B., Chicago, IL

"It isn't a question of 'misreading' the Fed. Rather, it's a question of whether the markets are responding as the Fed would like. The Fed recognizes it's dealing with a delicate balancing act and would prefer that the markets not become over confident with respect to potential Fed rate cuts. Therefore, to ensure inflation is more appropriately managed without raising rates the Fed is using the media and the markets to their advantage!" -- Paul P., AZ

"The Fed is always 6 to 9 months behind in their actions. The new captain has not changed this timing. The Fed has already missed the appropriate time to begin lowering interest rates." -- David T., Michigan

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"Inflationers are misreading the Fed, because the Fed's crystal ball only sees into next week, and not all the unemployment to come because of housing meltdown." -- Dee H., Tennessee

"No. What the market is doing is over-reading the markets, and making a mountain out of a molehill. If Bernanke and the Fed thought all these worries were real they would not sit still, as they are doing. All the news around irrelevant issues is driving the market in the ground---not the Fed." -- Drake

"Mr. Bernanke has been right on the money since being appointed as chairman. What's been the culprit is too many people buying a new home just for the appreciation value and not wanting to live in it." -- Wayne D., Texas

"No. The Fed is misreading the economy. Inflation is not an issue and, indeed, will decline to well within the Fed’s comfort zone by mid-year. The economy is floundering and the “slow but steady growth” scenario on which Mr. Bernanke is betting will not materialize... The market is reacting to Bernanke’s comments exactly as one would expect. The problem is that Bernanke's commentary on the current economic scenario is dreadfully wrong." -- Gary S., New York

"The market had a good time the past couple of years and we had a huge sell off the previous month, which has brought dilemma on investors minds. Although market movement has a direct impact from a Fed decision, it’s the investors, news of the company, demand of the industries, unemployment, foreign market and economy that play a major role in the market. No, the market is not misreading Fed. It's misreading inflation." -- Civi S., California

"One interesting point the chairman made yesterday, that I don't think the markets or the media are focusing on is that there is no evidence that an expansion has to be short lived, nor is there any evidence that expansions die of old age. This seems to say that the Fed is very much interested in continued growth in the economy as well as fighting inflation. And they want to avoid a recession to the best of their ability." -- Powell F., South Carolina