As Bloomberg.com reports:

Consumer prices last year surged 4.1 percent, the most in 17 years, spurred by higher fuel and food costs. A government report yesterday showed the 12-month increase in wholesale costs accelerated to 7.4 percent in January, the biggest jump since 1981.

And yet,

Federal Reserve Chairman Ben S. Bernanke signaled the U.S. central bank is prepared to lower interest rates again even as inflation accelerates. ... Traders anticipate the central bank will lower the benchmark rate by at least half a point by the end of the next meeting, on March 18, futures prices show. Officials have lowered the rate by 2.25 percentage points since September, to 3 percent.

Note that, using the year-over-year CPI as a measure of current inflation, the Fed funds rate is currently negative in real terms: 3.0 - 4.1 = -1.1. Not surprisingly foreign investors are dumping short-term dollar assets with the result that, as Forbes headlined, "Dollar slumps to new all-time euro low as Bernanke hints at rate cuts".

So if part of Bernanke's objective is to help revive house sales by lowering long-term interest rates, how's that going? Not well, the AP reports:

The 30-year [Treasury] bond fell 6/32 to 95 16/32 with a 4.68 percent yield, up from 4.67 percent.

Guess what? Cutting the Fed Funds rate -- even threatening to do so -- raises inflation expectations, which raises long-term interest rates. 10-year Treasury bond yields have also risen since mid-January.