Increased Concern Over Economic Growth May Stall FOMC
June 24, 2008
The S&P/Case-Shiller Home Price Index revealed that U.S. home prices continued to suffer. Home prices in 20 metropolitan cities dropped 15.3 percent in April y/y, marking the largest decline since the survey began in 2001. In addition to the disappointing housing data, consumer confidence fell in June to its lowest level in 16 years. Consumers’ assessment of present conditions worsened due to the deteriorating outlook in business conditions and the labor market. These recent developments have led to increased speculation that the Federal Reserve may not be as aggressive in increasing interest rates this year on concerns over economic growth. As such, the U.S. dollar fell nearly 0.5 percent against a trade weighted basket of currencies.