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 June 07, 2007

Federal Reserve Chair: Housing Slump Lasting Longer than Expected
The chairman of the Federal Reserve, told bankers at a conference in South Africa this past Tuesday that the housing slump in the United States will last longer than was previously predicted. At this point however, it has not spilled over into other parts of the country's economy.
The chairman was addressing them via satellite. He expressed his concerns regarding rising inflation, but at the same time made it clear that a rate increase by the Federal Reserve was unlikely.

The next meeting of the Federal Reserve Board is on this month on the 27th and 28th. Many economists believe that the fed will leave the rate at 5.25% a level that it has been at for a year.

The chairman reported that it had appeared that demand for homes had stabilized when home sales leveled off in 2006. However in 2007, sales have continued to decline add to that tougher lending standards, and the demand is further constrained. A large supply of unsold homes continues to exist due to the current decrease in demand. New home construction is expected to remain "subdued" for a while.

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