§ 28. Mr. Austin Mitchellasked the Chancellor of the Exchequer if he will estimate the annual cost to industry of each 1 per cent. increase in minimum lending rate.
§ Mr. Ian StewartThe Bank of England ceased to post a continuous minimum lending rate on 20 August 1981. It announced a minimum lending rate of 12 per cent. on 14 January for that day only. As far as bank base rates are concerned, the annual cost of each 1 per cent. rise in terms of higher net interest payments of industrial and commercial companies is about £250 million.
§ 38. Mr. Lathamasked the Chancellor of the Exchequer what proposals he has for reducing minimum lending rate.
§ Mr. Ian StewartThe Bank of England on 20 August 1981 ceased to post a continuous minimum lending rate. It announced a minimum lending rate of 12 per cent. on 14 January for that day only. As to the Government's approach to interest rates generally, it is that they should be at whatever level is necessary to secure sound monetary conditions and continuing downward financial pressure on inflation. That is the only way to achieve a sustained reduction in interest rates.