The Governor of the Bank of England, Sir Edward George, said the current rate of house price inflation was unsustainable.
He told the Commons Treasury Select Committee if house price rises fed into consumer demand and threatened inflation, the bank would act to curb it with an interest rate rise.
He stressed it was not house price inflation itself that would trigger any rate rise but its impact on overall consumer demand.
If the current rate of credit growth continued for any great length of time, the resulting adjustment could be quite severe.
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