Fed Chairman suggests more rates cuts to come

Federal Reserve Chairman Ben Bernanke Wednesday delivered an economic forecast which indicates lowering interest rates further next month. Investors are expecting a possible total 1% rate cut through the rest of the year.

Bernanke acknowledged "Stagflation" - both a stagnant economy and inflation. Weak growth and rising prices are unusual when they happen at the same time.

Long term rates (Mortgages) typically go up when there is inflation. But they typically go down when the economy is weak. The result is current volatility and interest rate swings.

A recent survey showed half of surveyed economists think the U.S. is either already in a recession or will be this year.

Mr. Bernanke also talked about rules the Fed wants to implement regarding mortgages - including measuring the homeowner's ability to re-pay and requiring lenders to escrow taxes and insurance.

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Chris Hirai | Wells Fargo Home Mortgage

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