§ Mr. Austin MitchellTo ask the Chancellor of the Exchequer what account was taken of growth forecast for(a) 1995 and (b) 1996 in determining the latest reduction in United Kingdom interest rates in his discussions with the Governor of the Bank of England. [7726]
§ Mrs. Angela KnightInterest rate decisions are not based solely on any one indicator but are based on an overall assessment of all the relevant information concerning the prospects for inflation. As the framework is forward-looking, monetary policy responds to changes in cost and demand pressures which alter the outlook for inflation.
As usual, the minutes of the discussion at the 13 December meeting will be published in due course.
90W
§ Mr. MitchellTo ask the Chancellor of the Exchequer (1) what assessment he has made of the effect of a reduction on interest rates of one quarter of 1 per cent. on economic growth in(a) 1995 and (b) 1996; [7416]
(2) what assumptions he made as to interest rates in making his growth forecast for 1996. [7415]
§ Mrs. KnightThe Government do not disclose the interest rate assumptions that underlie their forecasts, which are not based on any particular pattern of interest rates. Interest rates are only one of many influences on economic growth.