Jump to content
House Price Crash Forum
Sign in to follow this  
Boom'n'Bust

Fed Chief Reveals His Thoughts On House Price Risk

Recommended Posts

Some quite interesting stuff from Greenspan over the weekend.

He's bearish on house prices:

"the housing boom will inevitably simmer down. As part of that process, house turnover will decline from currently historic levels, while home price increases will slow and prices could even decrease"

And he recognises the important part that asset prices play in the economy:

"The determination of global economic activity in recent years has been influenced importantly by capital gains on various types of assets, and the liabilities that finance them. Our forecasts and hence policy are becoming increasingly driven by asset price changes."

But he doesn't think that central banks can do much about asset prices at the moment:

"I find it difficult to envision central banks successfully targeting asset prices any time soon. However, I certainly do not rule out that future work could improve our understanding of asset price behavior, and with it, the conduct of monetary policy."

He's unapologetic about having caused the boom through low interest rates through:

"Given the potentially severe consequences of deflation, the expected benefits of the unusual policy action were judged to outweigh its expected costs."

But he's determined to keep tightening monetary policy now:

"Monetary policy, for example, cannot ignore the potential inflationary pressures inherent in our current fiscal outlook ... We had too much experience with the dangers of inflation in the 1970s to tolerate going through another bout of dispiriting stagflation."

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
Sign in to follow this  

  • Recently Browsing   0 members

    No registered users viewing this page.

  • 338 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



×
×
  • Create New...

Important Information

We have placed cookies on your device to help make this website better. You can adjust your cookie settings, otherwise we'll assume you're okay to continue.