§ Mr. Atkinsonasked the Chancellor of the Exchequer under what statutory authority minimum lending rate is fixed; if he is satisfied with the current rate; and if he will make a statement about recent movements in the rate.
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§ Mr. Denzil Davies, pursuant to his reply [Official Report, 3rd February 1977; Vol. 925, c. 309], gave the following information:
There is no specific statutory authority regarding the manner in which the Bank of England fixes its minimum lending rate. Under existing arrangements, the rate is normally determined by a formula relating it to the average rate of discount at the weekly Treasury bill tender, but the rate may be fixed independently of the formula as was done on 3rd February. Such administrative changes are made by the Bank of England with my right hon. Friend's approval. The recent reductions have followed the marked improvement in the tone of the financial markets. My right hon. Friend hopes, over the coming year, to see further reductions in the rate, and in interest rates generally, but the timing and strength of this development must depend on the underlying course of the economy and must take into account the need to maintain firm control over the growth of the monetary aggregates.