Now, a new (not really) word is creeping into the rate discussion, inflation. Concern over the stimulus package and bail out cost, many economists are thinking that we could be on the verge of inflation. The next few days could be major turning points in the current mortgage environment. Today, the consumer sentiment figures came in at their lowest yet, even lower than expectations.
The Fed is kicking off their scheduled two day meeting today and it will be interesting to see what they do. Obviously, they can't lower the discount rate below zero, but what they have to say in their comments can have a huge effect on how the markets view what they are doing. The Fed policy announcement will be tomorrow afternoon.
I am expecting some mention about the possibility of inflation and if that happens, we will probably see a pretty quick jump in interest rates. If there is not mention of inflation, rates will probably continue to be flat.