HL Deb 20 November 1997 vol 583 c87WA
Baroness Miller of Hendon

asked Her Majesty's Government:

Whether they consider that the five increases in interest rates that have been made by the Bank of England since May 1997 will assist in economic convergence with other European Union states whose interest rates are lower than Britain's; and, if so, how.

Lord McIntosh of Haringey

The Government are satisfied that the new monetary policy framework will deliver the Government's inflation target of 2 per cent. Low inflation is essential, both for the Government's economic objective of high and stable levels of growth and employment, and for sustainable convergence with other EU economies. Since May, market expectations of inflation and interest rates have fallen: as a consequence long-term interest rates have fallen by almost a full percentage point and are now much closer to German levels. This indicates that the prospects for lasting convergence have improved.