Rising inflation, slowing and turbulent markets fearful of interest rate hikes and other contributing factors like: oil that can rise and drop two dollars a barrel in one day but keeps hovering around $70, downward trends in new-home demand figures, businesses are raking in profits at an ever faster pace, unemployment keeps edging down and wage growth keeps edging up (though job growth has been mixed recently), and in the face of all this US Treasuries and the Dollar have rallied and consumer confidence and spending have dipped raise many questions. Like, how will the Fed proceed in light of such a muddled picture? As the old joke about how porcupines make love goes: "Very carefully". In June the Fed will meet to discuss whether or not to increase the Feds Fund Rate another quarter of a point or not (a larger increase is seen as almost as unlikely as a decrease due to the markets already being spooked, among other factors) .The main problem, but by no means the only inputs to this equation nor the only one I'll discuss, is that the Fed seems to be caught between its main objectives of low & stable inflation and high & stable growth coupled with finical system stability (in the form of investor confidence waning). The PCE index measure of inflation is above many Fed governors, including Bernanke, stated comfort zones. Knowing this, many in the markets are expecting another hike, but this is already having negative effects on the markets. That coupled with things like dropping consumer spending and confidence (partially due to oil) and an apparently declining housing market have created a camp that thinks that raising rates may cause the economy to stall or even dip into a recession. Coupled with mixed signals from the Fed, many of which are pretty open to interpr ...