The Federal Reserve decided to keep its benchmark interest rate at is current 0 to 0.25 percent range for the coming six weeks, and long-term mortgage rates posted little movement this week as well, according to mortgage financier Freddie Mac Thursday.

Average rates on 30-yaer fixed rate loans inched up to 5.42 percent, excluding points, during the week ended June 25, from 5.38 percent the week before.  Freddie’s VP and chief economist Frank Nothaft explained that “mixed economic reports” were the cause for the timid rate movement. He cited an increase in existing home sales contrasted by a dip in new home sales and national median prices.
Meanwhile, during its bi-monthly meeting the Fed held its rate steady as risks of deflation have dropped and many other pieces of the economy seem to be falling back into place.

The Fed is still plan to pump billions of dollars into buying Treasury bonds and toxic mortgage-backed securities, but have started to slow down the rate of their purchases. The immediate result seemed to be a rise in mortgage rates, and some think that could stymie the economy from recovering soon.  From Fed Chairman Ben Bernanke’s recent comments, it sounds like inflation is the bigger issue for the central bankers.

“The key issue here is can we unwind this money creation and low interest rates in time to head off inflation when the economy begins to recover?” Bernanke said in remarks before the House Oversight and Government Reform Committee. “We have all the tools we need to do that. We believe we can do that. We will certainly remove that stimulus in time, and we are committed to price stability and we will make sure that it happens.”