Inflation—main concern for Fed

The subdued pace of inflation is replacing jobless rate as the main reason the Fed is not ready to begin hiking interest rates, minutes of the latest FOMC meeting showed. Thus, the Fed plans to keep short-term interest rates near zero for a considerable period. The central bank is likely to start raising rate in the mid-2015. Minutes showed that couple of officials wanted the Fed to signal that it may raise rates sooner, while others wanted the central bank to indicate it may wait longer. Officials noted that economic growth and employment growth remain unusually steady, and policy makers continued to expect both trends would persist. Moreover, the central bank appeared to be calm about signs of economic weakness in Europe and Asia, as well as recent market volatility. 

US housing starts surprisingly declined in October, while an increase in permits to the highest level in more than six years suggested the housing market was gradually regaining footing. Groundbreakings for single-family homes, condominiums and apartments dropped 2.8% to an annual 1.01 million rate following September's 1.04 million pace, the Commerce Department said. The data also revealed that building permits soared 4.8% to 1.080 million, the highest level since June 2008. Coupled with the industry sentiment running near nine-year highs, low interest rates, and increasing employment, the housing data confirms that the broader economy is growing at an above-trend pace.