Fed Boss in Interest Rate Conundrum

Federal Reserve Chairman Ben S. Bernanke faces one of his more challenging Federal Open Market Committee (FOMC) interest rate decisions this afternoon. While challenged with a fragile economy teetering on recession and housing and financial markets that need stabilization prior to rate tightening, inflation zooms to a 17 year high.

This unique combination of factors and mounting pressure of possible dissenting Fed members will probably lead Chairman Bernanke to leave the benchmark rate unchanged.

Dissent is unusual in the 12-member Fed panel due to the uncertainty it signals to financial markets, given to parsing every word of the FOMC statements for forward indicators. In fact a dissent on today's interest rate decision would mark the first since 1992, in what at the time was characterized as a "rebellion"--again in the face of inflation concerns.

What does this mean for consumers? A likely maintenance of the current benchmark rate of 2 percent and strong ant-inflation language. An FOMC statement that is likely to send mortgage rates and other types of consumer credit into a steady march towards tightening, or higher rates. This will continue to fuel housing and mortgage woes, but is likely to help push through the pain quicker and stem increased price pressure on consumers' routine purchases.