US rates expected to remain at 2%

As property prices and consumer confidence in the US continue to fall, it is expected that the Federal Reserve will keep interest rates at 2% this week.

Consumer confidence in the US is at its lowest level since 1992 due to plummeting home values and rocketing oil prices.

Reports show that the consumers’ view of the economic future has never been lower, sparking concerns that an already weak consumer spending could worsen.

Furthermore, a survey showed that US property prices were considerably lower in April this year, compared with April 2007.

According to the Case-Schiller home price index published yesterday, property prices in the US fell by their fastest rate since 2000.

Prices in the 20 cities it monitors were 15.3% lower in April compared to 12 months ago with Las Vegas and Miami experiencing falls of over 25%.

A worsening situation was reported in the latest reading of US consumer sentiment.

According to the Conference Board, which polls 5000 households each month, higher food and fuel prices and concerns over the economy, jobs and wages mean that US consumers’ expectations for the next 6 months are at a record low.

Commenting on the report, Lynn Franco of the Conference Board, said consumers feel that purchasing power is dwindling. Soaring gas and food prices are not keeping pace with wages which is denting consumer confidence.

The Federal Reserve, which is headed by chairman Ben Bernanke, has cut rates from 5.25% to 2% since September.

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