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dude wheres my house

Someone Should Explain To Jounalists The Purpose Of Interest Rates

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I have noticed in the last few weeks that the media seem to be suggesting that the moment the house prices start to drop the BOE will cut rates to stabalise it

I really can t see this happening and could be giving people the confidence to hold onto their properties past the point when they should be looking to sell.

Is there any chance they will save the bubble again... If it looks like it i am buying

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i think they'll do what they can do continue this bubble- they're doing well out of it aren't they?

i also think that IR will be put on hold-maybe even next month

-some of my friends say they'll be ok even if IR went upto 7%- and these people are on 35k

IR rates alone wont burst this bubble- not in london anyway

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i think they'll do what they can do continue this bubble- they're doing well out of it aren't they?

I don't doubt it,probably explains the deviation from the 2%CPI target through loose rates,God knows when we will see it again.I agree with dude wheres my house,once it turns I doubt they will do much about it ,even if they could.

Edited by crashmonitor

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-some of my friends say they'll be ok even if IR went upto 7%- and these people are on 35k

IR rates alone wont burst this bubble- not in london anyway

Everyone doesn't have to go under for there to be a crash. It just needs a sufficient number of forced sellers combined with a drop in demand and the price can only go one way.

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I have noticed in the last few weeks that the media seem to be suggesting that the moment the house prices start to drop the BOE will cut rates to stabalise it

I really can t see this happening and could be giving people the confidence to hold onto their properties past the point when they should be looking to sell.

Is there any chance they will save the bubble again... If it looks like it i am buying

The BofE are attempting to wrestle with CPI. Is it not the case, housing costs do not feature in this basket and accordingly are not a priority for the movement of rates?

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But the BOE cut rates in 2005 when the market stalled didn't they?

I think they cut rates because consumption generally was thought to be tanking. Admittedly a big driver of consumption is the refurnishing / decoration costs of house moves so the 2 aren't unrelated.

It's too easy to re-write history to fit an argument. Petrol prices were acting as a real damper on consumption in addition to the then recent rises. Enough BofE members were uncertain then as to whether the first round inflationary effects of the increased oil cost would translate into secondary inflationary expectations. Mervyn King was right with hindsight though out voted at the time.

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. Mervyn King was right with hindsight though out voted at the time.

Token resistance which for some reason he never sought to repeat in the subsequent months.Obviously he was happy with the decision by September 2005,when he voted hold.Or are there subtle rules and etiquette that the committee must observe.No wonder they have got us into this mess.

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To make the same mistake twice would indeed look careless.

They'll do whatever it takes, the BoE doesn't really give a stuff about inflation or eroding purchasing power.

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But the BOE cut rates in 2005 when the market stalled didn't they?

But the CPI was bang on the 2% target then so a cut could have been seen as justifiable. It is 40% over target now so no cut can happen.

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Guest d23
I have noticed in the last few weeks that the media seem to be suggesting that the moment the house prices start to drop the BOE will cut rates to stabalise it

i haven't seen these suggestions, was it one source or a few?

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