The Financial Post reports in its Tuesday, Oct. 8, edition that there was a growing belief that the Bank of Canada's rate cuts would lead to increased housing inflation but the opposite has occurred. The Post's regular guest columnist David Rosenberg writes that in September, the Greater Toronto Area saw a 9.8-per-cent surge in new listings, causing a 0.5-per-cent drop in average home prices. In Vancouver, new listings soared by 50 per cent, leading to a 1.4-per-cent decrease in average home prices. This is all important for the Bank of Canada, since headline inflation is already down to 2 per cent year over year despite shelter inflation still running hot at 5.3 per cent (though off the boil). Even as the BOC has cut nominal rates, the slide in inflation means that, in real terms, policy has been tightened rather unnecessarily by more than 100 basis points over the past year. Mr. Rosenberg says it is bizarre that the BOC would allow itself to fall this far behind the curve given that year-over-year real gross domestic product growth has decelerated sharply below-trend to 0.9 per cent from 1.3 per cent, while the unemployment rate hooked up to a three-year high of 6.6 per cent from 5.5 per cent a year back.