§ Mr. Gouldasked the Chancellor of the Exchequer what assessment he makes of the relative importance of the exchange rate and of monetary targets as constraints upon inflation.
§ Mr. LawsonThe main constraint on inflation is the Government's determination to maintain monetary conditions consistent with reducing inflation. Both the exchange rate and the money supply convey information about monetary conditions, but their behaviour needs to be interpreted in the light of all the available evidence, including structural changes in the demand for money.