Home Mortgage Rates Increased This Morning on Heels of Heated Inflation Talk by Philadelphia Fed President Charles Plosser

The bond market is trading very actively as inflation talk is raising concerns. 

Philadelphia Fed President and voting member Charlie Plosser came out of the gate with some surly comments early this morning, suggesting the Fed is losing its credibility as an inflation fighter and that monetary policy "should be reversed quickly once the threat from financial markets abates"...meaning that he believes the Fed should take back some of the cuts.

Inflation could be a much bigger threat than many believe, and Plosser seems to agree.  Plosser also said "One cannot and should not ignore other fundamental aspects of policy, especially the tendency for inflation to accelerate when policy is unduly easy..."  and "Deviation (in monetary policy) should be temporary and limited and promptly reversed when conditions return to normal....to do otherwise risks eroding central bank credibility and unleashing inflation expectations."  Bonds didn't like any of this talk and have been under some selling pressure so far today. 

So Plosser indicates that when financial conditions stabilize the Fed should be ready to raise (short term) interest rates.   

Lots of reports coming out last Friday also expect chopiness in mortgage rates.  Any good news is going to take some steam out of Treasuries and mortgages.  Stay in touch with your mortgage lender during this volative period.