The Chairman seems to be well aware of the upturn in housing, which he mentioned twice. But he was careful to not reveal an upbeat attitude that he knows would cause rates to spike in expectation of the Fed ‘normalizing’ policy with ‘neutral’ being a Fed funds rate maybe 1% over the inflation rate, or something like that.

In other words, he wants longer term rates, and mtg rates in particular, to stay down for now, which causes him to guard any optimism he may have, and then some.

It falls under ‘managing expectations’ and my best guess is he’s waiting for unemployment to fall below 8% before he publicly becomes more optimistic.

“Key sectors such as manufacturing, housing, and international trade have strengthened, firms’ investment in equipment and software has rebounded, and conditions in financial and credit markets have improved.”

“Rather than attributing the slow recovery to longer-term structural factors, I see growth being held back currently by a number of headwinds. First, although the housing sector has shown signs of improvement, housing activity remains at low levels and is contributing much less to the recovery than would normally be expected at this stage of the cycle.”