This week, Standard & Poor’s reported its latest reading on home prices in 20 U.S. cities. The Case/Shiller home price index increased 0.19 percent compared to March, but badly missed the 0.8 percent increase economists had expected. Prices rose 10.82 percent on a year-to-year basis, but that too came in below expectation of an 11.5 percent bump. Moreover, in 19 of the 20 cities included in the index, prices in April rose at a slower rate than they had in March.

On the other hand, in May, existing home sales rose 4.9 percent, the second consecutive monthly increase. In April, existing home sales grew 1.5 percent. This is a welcome change and a positive for the economy: for six of the seven prior months, on a sequential basis, from August 2013 through March 2014 sales of existing home sales fell. In all, it was a mixed read on the housing market, which has failed to keep the momentum it had before the harsh winter and is one of the economic concerns for Federal Reserve Chair Janet Yellen and company, as cited in its policy statement released after the conclusion of its latest two-day meeting last week.

The Federal Open Market Committee (FOMC), the policy-setting committee of the Federal Reserve, changed neither its assessment of the long-term inflationary environment, which it says remains subdued, nor its language about inflation. The official FOMC statement states: “Inflation has been running below the Committee's longer-run objective, but longer-term inflation expectations have remained stable.”

The Fed’s utter lack of concern over change in inflationary pressure was a mild surprise to observers because the latest consumer prices (CPI) reading, also released last week, had indicated that consumer inflation in the U.S. has accelerated to a 2.1 percent rate. May’s monthly rate of 0.4 percent, in fact, was the fastest growth in inflation since February of 2013.

But meanwhile the Fed does not take into consideration the CPI, or indeed the producer price index (PPI), as much as Personal Consumption Expenditures (PCE), which comparatively speaking looks tame, at a current annualized rate of only 1.5 percent. Since the Fed purposely kept its inflation commentary unchanged despite some price indexes increasing, and Fed Chair Janet Yellen downplayed inflation in her press conference, it signals that the Fed, at least publicly, isn’t worried about inflation at this time, emboldening the market to believe that indeed the U.S. central bankers may maintain their dovish stance well into 2015.

Furthermore, besides dissatisfaction over the extent of the labor market recovery and weakness in the housing market, the Fed expressed reduced optimism. It said the U.S. economy will grow only 2.1 to 2.3 percent in 2014, down from the 2.8 to 3 percent projected by the central bank in March. That gives us yet another signal that the Fed will approach raising the overnight federal funds lending rate with extreme caution, and it is not in any hurry to do so, contrary to what some investors may still fear.

So here we have a moderately growing economy that’s still not expanding at a fast enough pace to warrant monetary tightening, and that is a sweet spot for investors. None of this means we can let down our guard: we will watch economic data and markets closely for any signs of inflation and alert our readers if we see any change on the inflationary horizon. Our new proprietary indicators will help provide short-term guidance and our Core Portfolio recommends ETFs that in our opinion are the best holdings for the long haul.

We do see signs of commodity inflation, however, and, as mentioned in the latest issue of Cash Cow, we remain strong advocates of holding some precious metals in a portfolio to hedge against the inevitable surge in prices we expect to result in coming years from growing resource scarcity as well as the decline of the U.S. dollar.