§ 10. Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what was the aggregate percentage increase in domestic credit expansion over the latest period of six months at an annualised rate; and whether this was in conformity with the monetary policy of Her Majesty's Government.
§ Mr. LawsonSince no stock figure corresponding to domestic credit expansion is available a percentage growth figure cannot be given. Domestic credit expansion was £3.7 billion seasonally adjusted in the six banking months to mid-April. This compares with £5.8 billion in the previous six months. These figures are consistent with our monetary policy, which is formulated in terms of a target range for sterling M3 growth.
§ Mr. Bruce-GardyneI am grateful to my hon. Friend for that reply. I am 700 sure that we all welcome—certainly all my right hon. and hon. Friends—the way in which monetary aggregates are coming back on target. However, will he and the Treasury team take care to note that at a time of continuing balance of payments deficit domestic credit expansion statistics are vital to indicate the scale of liquidity growth in the economy?
§ Mr. LawsonMy hon. Friend is right. Domestic credit expansion needs to be monitored, and we monitor it. If he is suggesting, as I think he may be, that monetary policy should be even tighter than at present, I must disagree with him. We are pursuing a tight monetary policy, as the growth rate of sterling M3 of 6½ per cent. as an annual rate over the past six months testifies.
§ Mr. JayIf, as the Prime Minister told the House last week, the rise in the RPI to 21 per cent. is largely due to higher pay settlements, how can it be checked without an incomes policy?
§ Mr. LawsonIt can and will be checked by monetary policy.