§ Mr. Austin Mitchellasked the Chancellor of the Exchequer whether he will publish in the Official Report the estimated increase in the money supply in the first half of 1980, taking account of disintermediation; and if he will indicate when he expects this to be reflected in a corresponding increase in the rate of inflation.
347W
§ Mr. LawsonThe seasonally adjusted increase in sterling M3 for the first six banking months of 1980 was 11.2 per cent. at an annual rate. After adjusting for distortions caused by the operation of the corset and its removal in June the underlying growth rate was probably somewhat higher. It is, however, not possible to measure it precisely, particularly from month to month. Estimates of distortions are inherently unreliable and would be liable to frequent change as more information became available. On the basis of our best assessment to date, it seems likely that the growth of sterling M3 during the current target period has been of the order of 20 per cent. per annum in underlying terms.
Future rates of inflation will depend on monetary developments over an extended period and short-run fuctuations in monetary growth probably have relatively little impact.