§ Mr. Austin Mitchellasked the Chancellor of the Exchequer what effect the increase in minimum lending rate has had on foreign confidence; whether he expects the amount of sterling held by foreigners to increase as a result; if so, what is his estimate of the effect in money terms of the rise; and whether and to what extent the funds in question are likely to feed into the money supply and thus require a further increase in interest rates.
§ Mr. LawsonThe rise in minimum lending rate underlines the Government's commitment to firm monetary policies. It may, therefore, tend to increase the demand for sterling. However, in present circumstances the effect on net flows across the exchanges and hence on the money supply is likely to have been small.