The Fed

The Federal Reserve held short-term interest rates steady for its third consecutive meeting, and continued to warn additional rate increases may be needed to stem inflation.

Since the summer time, the Fed has been juggling competing concerns of rising inflation and slowing growth. Core inflation rose to 2.9% in September, the highest in a decade and well above the 2% level many Fed officials have said they are comfortable with. Although inflation by the Fed's preferred index is lower, officials still want to see it drop back to 2% over the next few years.

On Wednesday the National Association of Realtors said existing home sales fell 2% in September to an annual rate of 6.18 million, from August, about as much as economists had expected. The inventory of existing homes, at 3.8 million, was equal to about 7.3 months' worth of sales for the third month in a row. The median price was $220,000, down 2.2% from a year earlier, a rate of decline equal to August's. Even after the declines, both the level of sales and prices remain high, and the drop does not appear to be accelerating.

"Economic growth has slowed over the course of the year, partly reflecting a cooling of the housing market. Going forward, the economy seems likely to expand at a moderate pace."

To the entire Fed statement, CLICK HERE and read Paul McCulley at Pimco in Newport Beach.

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