§ Mr. Gouldasked the Chancellor of the Exchequer what effect he expects a fall in the rate of inflation in the United Kingdom relative to other countries to have on the exchange rate, all other things being equal.
§ Mr. MooreKnowledge of the determinants of exchange rates is uncertain, and what happens to the exchange rate after a change in one of its determinants will depend crucially on the circumstances holding at the time and on expectations of future developments. A fall in the United Kingdom inflation rate relative to world inflation could, to the extent that it had not been anticipated, lead to a rise in the exchange rate, other things being equal. It is probably not, in general, valid to assume that other things will be equal.