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This column was originally published on RealMoney on June 29 at 2:53 p.m. EDT. It's being republished as a bonus for readers.

The Federal Reserve moved closer to ending its interest rate hikes today by both indicating that it felt that economic growth has begun to moderate, and by showing vigilance against what the Fed implicitly said was an unwelcome rise in core inflation. The statement is a success for Fed Chairman Ben Bernanke, who, after several missteps, has

found his footing by delivering a balanced statement that should give him the flexibility to let the incomingdata take center stage rather than the Fed's frequent public appearances.

One of the more important distinctions between today's statement and the May 10 statement was the Fed's assessment of the economy. Whereas in May the Fed said that it felt that growth was "likely to moderate," today the Fed said that economic growth "is" moderating. There is a major difference between the two. If, as the Fed says, the economy has already begun to moderate, the Fed would more likely want to pause to wait and watch for the continued lagged effects of the factors it cited: housing, rate hikes and higher energy prices.

Second, by acknowledging that core inflation had accelerated, the Fed more closely aligned itself with the views of the financial markets, which have become more fearful of inflation over the past few months. The use of the word "elevated," which was used to describe the recent data on core inflation, is the equivalent of "unwelcome," a word that the Fed has used in the past to describe its disdain with the inflation situation. By showing such displeasure, the Federal Reserve is showing that it engaged completely in the effort to solve the problem. This particular part of the statement is one in which we see Fed Chairman Bernanke now donning the Fed Chairman's clothing in ways he failed to until early June. This is good news for the markets.

The Fed statement was also reassuring, just as Bernanke was on June 16 in a speech that helped the Dow to rally 200 points. The Fed admitted inflation had ticked up, but provided reasons why it would likely moderate, including via the Fed's own vigilance.

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Tony Crescenzi is the chief bond market strategist at Miller Tabak + Co., LLC, and advises many of the nation's top institutional investors on issues related to the bond market, the economy and other macro-related issues. At the request of the Federal Reserve, Crescenzi is a regular participant in the board's Livingston Survey of economic forecasters. He is also the author of

The Strategic Bond Investor

. At the time of publication, Crescenzi or Miller Tabak had no positions in the securities mentioned in this column, although holdings can change at any time. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Crescenzi also is the founder of, a popular Web site covering the bond market and the economy. Crescenzi appreciates your feedback;

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