(Figure 3) Initially, we estimated that the LVR restrictions would dampen annual growth in house prices by 1–4 percentage points; house sales by 3–8 percent, and credit growth by 1–3 percentage points over the first year that the policy was in place.
With the economy expanding at a solid pace, resource utilization rising, cost pressures increasing, and short-term interest rates still relatively low, the Federal Open Market Committee (FOMC) over the course of 2005 continued the process of removing monetary policy accommodation, raising the federal funds rate 2 percentage points in eight increments of 25 basis points each.