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Bbc: House Prices 'ignore Credit Woes'

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http://news.bbc.co.uk/1/hi/business/7015599.stm

House prices 'ignore credit woes'

Estate agent's window

House price rises were curbed by interest rate rises, says Nationwide

The UK housing market managed to shrug off recent credit market turmoil with prices rising in September, according to the Nationwide.

But the group warned current credit problems may lead to a softening in the market as loan conditions get tougher.

Prices increased 0.7% during September, after rising 0.6% in August, beating forecasts of a slowdown to 0.4%.

However, Nationwide said annual price growth slowed to 9% in September from 9.6% - its lowest in almost a year.

The building society added that most of the slowdown in annual price inflation was down to the effect of recent Bank of England interest rate hikes.

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you could argue if prices are continuing to rise, no need for MPC to cut rates <_<

Indeed, but this ignores the subtle asymmetry prevalent in monetary policy, to wit, perceived upside risks to inflation don't count as the MPC don't make predictions, whilst perceived downside risks can be factored into rate setting policies, because some predictions are allowed. :blink:

A case in point was the upside risk to inflation posed by inflated and inflating oil prices last year. The inflationary effects were factored out of the picture by supposing oil prices would fall off (a market prediction). Meanwhile gathering inflationary pressures, such as China's now net positive and positively risng effecs on inflation, are treated on a "let's wait and see the figures" basis.

Edited by Sledgehead

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