Bank of England Governor Predicts Housing Market Will Be Slow

London–The U.K. housing market will be “extremely weak” but policy makers won’t “overreact” to inflation, according to Bank of England Governor Mervyn King.”We’re likely to see a period of extremely weak activity'” in the housing market, King told lawmakers during testimony to the Treasury Select Committee in London. In June, U.K. home prices fell by the biggest amount in 2008 when buyers stepped away from the market, Rightmove Plc said this week. According to HBOS Plc–Britain’s biggest mortgage lender–property values could decline 9 percent this year, Bloomberg reports.The central bank’s Monetary Policy Committee cut interest rates three times in 2007 to prevent a recession; it may now raise rates. The U.K. is at risk for inflation to fall too far below the bank’s target in 2009 because of slow economic growth, King said.Global economic expansion is slowing; yet many central banks are contemplating interest rate increases because of growing inflation.Romania’s central bank increased its main rate this week to 10 percent; the Reserve Bank of India also raised rates.