§ 44. Mr. Gouldasked the Chancellor of the Exchequer what account he takes of the monthly figure of M3 in determining his monetary policy.
§ Mr. Robert SheldonThe figures for the growth of £M3 and the other monetary aggregates fluctuate from month to month, and so should not be interpreted in isolation. My right hon. Friend instead has 703W regard to what appears to be the underlying trend over a period of, say, six months and how that trend may be changing. The most recent monthly figures for £M3 and for its components are an important element in that assessment, but no more than that.
§ Mr. Bruce-Gardyneasked the Chancellor of the Exchequer what has been the rate of increase in the money supply—M3—on an annual basis in the 12-month period of current money supply targets to date; and what steps he intends to take to bring this rate of growth into concordance with his targets.
§ Mr. Robert SheldonIn the 10 months to mid-February, £M3 grew at an annual rate of 10.7 per cent., which is within the target range of 8–12 per cent. set in the April 1978 Budget for the period to mid-April 1979. The target was subsequently rolled forward to cover the 12 months to mid-October 1979. In the first four months of the new target period £M3 grew at an annual rate of 15.8 per cent. The growth of £M3 during this latter period, and particularly in January, has been affected by a number of special factors. If allowance were made for these, the underlying rate of growth of £M3 would be broadly consistent with the target range. The Government have made it clear that they will keep to their monetary targets. I do not consider that any further policy adjustment is required at present to achieve this.