The Federal Reserve has expressed growing confidence that the economy was moving towards a soft landing. The Federal Reserve has decided in its policy meeting to keep interest rate on hold at 5.25 percent. However, for the very first time the Fed has hinted the possibility that the American house sector may be bottoming out. While announcing the interest rates will be unchanged, Federal Open Market Committee expressed upward confidence that inflation was in control and have improved modestly in recent months, even as growth was somewhat stronger than the experts had expected. However, the latest decision of the Fed suggests that there is growing comfort with the outlook for both inflation and growth. The Federal Reserve’s pronouncement came soon after the Commerce Department reported that the economy grew at an unpredictably brisk annual pace of 3.5 percent in the last quarter of 2006. The latest figure released by the Commerce department show that increased consumer spending offset a housing market slowdown. Moreover, the experts have expressed concerns that the Federal Reserve may be inclined to continue raising interest rates as the risk of inflation pressure has not vanished yet. The Fed in its statement said that recent indicators have suggested to some extent firmer economic growth, and some hesitant signs of stabilization have surfaced in the housing market.