§ 7. Mr. Gouldasked the Chancellor of the Exchequer what role the exchange rate plays in his monetary policy.
§ Mr. Ian StewartThe exchange rate is one of many factors taken into account in interpreting monetary conditions.
§ Mr. GouldIf the Chancellor's money supply objectives, interest rate policy and exchange rate targets should prove to be inconsistent, which will take priority? Will he opt for an overvalued exchange rate, still pricing British workers out of jobs, high interest rates at damagingly high levels, or increased deflationary contraction? Which will it be?
§ Mr. StewartThere is a fundamental flaw in the hon. Gentleman's supplementary question, because there is no target for the exchange rate.
§ Mr. LathamWill my hon. Friend confirm that it should be Treasury policy to ensure a declining trend in interest rates?
§ Mr. StewartIt is our policy that there should be a declining trend in interest rates, and I am glad to note that the effectiveness of our fiscal and financial policies in recent years have brought that about. I hope that it will continue.