The accompanying statement began by stating that inflation is currently contained, but that due to rising energy costs and other price pressures, further firming may be needed. This was in keeping with Fed chairman Ben Bernanke's previous statement that future rate hikes would be data-dependent.

The news ignited selling in the financial markets, with Treasury prices falling and their yields, which move in the opposite direction of prices, beginning to rise. The Dow Jones industrials joined in the sell-off, dropping sharply, and the Nasdaq is edging down.

More details will follow.

Mortgage rates hold ahead of Fed
Submitted Mar 27 2006 4:50PM CST

U.S. Treasury securities weathered a session of moderate selling on Monday -- the day before the Fed is to announce its latest decision on interest rates. Concern about what the Federal Open Market Committee will or will not say about future interest-rate increases dampened enthusiasm for buying. And a weak auction of two-year notes did nothing to boost spirits. Pundits seem to agree that traders were loath to step into the bond markets the day prior to the Fed decision.

Although the Fed is expected to raise short-term rates by 25 basis points, which would be the 15th consecutive such move, there is no clear consensus regarding credit tightening down the line. This leaves the accompanying statement the focal point for Tuesday, as traders hope for clarification about rate-hike intentions. Fed Chief Ben Bernanke, who is chairing his first meeting, has said, however, that future rate hikes will be data-dependent.

Steady selling today sent Treasury yields, which move in the opposite direction of prices, up -- erasing some of Friday's gains. Mortgage rates, which are based on yields, ticked up with them, but not enough to substantially change them.

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