Immediate threat of 7% mortgage rate disappears

Economists believe Fed's monetary policy is too tight

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You can watch markets for a long time and not see a one-week reversal in psychology — and reality — as large as this. Mortgages are pulling back slowly from 6.75 percent, but the immediate threat of 7 percent has disappeared altogether.

One week ago, bond and stock markets were drowning in the depressing soup of an obvious inflation problem and a Fed too timid to do anything about it. Then it got worse: Tuesday’s CPI affirmed the fear, the core rate rising .3 percent for the second month in a row, way over the Fed’s 2 percent-annual ceiling.

Then things got weird.