§ 28. Mr. Nicholas Wintertonasked the Chancellor of the Exchequer what is his estimate of the reasons for the breaching of the 7 to 11 per cent. guideline on money supply; and to what extent high interest rates are a factor.
§ Mr. LawsonI do not accept that our target for money supply is being breached. In assessing money supply trends, it is always important to look at a run of figures. For example, the increase over the last six months has been about 9 per cent, at an annual rate, the middle254W of the Government's target range. Over a period, high interest rates reduce monetary growth.
§ 32. Mr. Dykesasked the Chancellor of the Exchequer if he plans to introduce any changes in the method of assessing the range of statistics measuring the supply of money.
§ Mr. LawsonAs was made clear in the Green Paper on monetary control, in assessing monetary conditions the authorities have regard to a range of measures of money and private sector liquidity. It is also desirable to monitor measures of credit expansion, such as DCE.
§ 38. Mr. Kenneth Lewisasked the Chancellor of the Exchequer at what point in the current year he anticipates the money supply will be under control within the limits he has set.
§ Mr. LawsonI do not accept the implication of my hon. Friend's question that the money supply is not under control. For example, over the past 6 months £M3 has grown at an annual rate of 9 per cent., which is in the middle of the 7–11 per cent. target range. However, the monthly change in £M3 can fluctuate substantially.