News this morning should show that UK house prices continued to fall sharply, at least on the measures from the Nationwide and Halifax, less so from other mortgage brokers or property agents. And the government's announcement yesterday will do little to alter the path of the housing market. A correction is underway from very high prices in the UK to less high prices - though still overvalued on most metrics.
So this is one reason why the MPC is very unlikely to want to cut rates at today's meeting - it would do little to prevent what they see as a necessary housing market correction from taking place. But the main reason why they will not cut, despite the UK economy coming to a standstill in Q2, is that inflation is too high. Not only is it well above the 2% target, but it is still accelerating. The ECB also meet today and are equally unlikely to cut rates, though the eurozone economy shrank by 0.2% in Q2. In fact, the ECB has raised rates this year (July), even though the economy showed signs of weakening.
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