Fed likely to continue tightening policy in 1Q06

08/29/05 - First Berlin

LONDON, August 29 (newratings.com) – Analysts at First Berlin believe that the Fed Chairman’s comments last week regarding the need to rectify the current economic imbalance, in the form of the housing boom, indicates continued tightening in the first quarter of 2006.

In a research note published this morning, the analysts mention that the continued increase in oil prices led to a decline in the Michigan consumer sentiment index for the first time in the past three months. The latest data on new and existing home sales also pointed to a slight cooling off, with a decline in the median new home prices, according to First Berlin.