Duncan: Fed Concerned About Katrina

Concern is rising at the Federal Reserve Board over how Hurricane Katrina could affect the economy, Doug Duncan, the Mortgage Bankers Association's chief economist, said Sept. 23 at the 18th Annual New England Mortgage Banking Conference."How are consumers going to react to $5-a-gallon gas? How will it lead through into the economy?" Mr. Duncan asked during the closing session of the conference in Providence, R.I. ".... In the last 25 years, we've become more fuel-efficient than we used to be, but the economy has grown tremendously. Homeowners use more energy than ever before. It will have an impact on household budgets on the consumption side." Mr. Duncan said he sees interest rates rising more aggressively, up to 6.5% in mid-2006. House prices will continue to rise, but not nearly as fast, Mr. Duncan added. "There are certain hotspots and markets that are troubling, but it's not a national issue," he said.