So this looks like it's intended behaviour, to improve performance. The
bug is already reported at
http://groups.google.com/group/gnu.bash.bug/browse_thread/thread/5621c726c6050292/2c4156d96acbc2c5?lnk=gst&q=pwd#2c4156d96acbc2c5,
and if it really is an issue, then there a couple of workarounds in the
response.

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console showing old content after folder renamed in other console
https://bugs.launchpad.net/bugs/503443
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