The overseas trading position of the United Kingdom has improved considerably. Exports increased sharply in the last quarter of 1966, and their growth was strongly maintained into the new year; in the four months from October to January, after seasonal adjustment, they were 10% higher, on average, than in the previous six months. The trend of imports appears to be downwards: in the same four months - which include the very low arrivals in anticipation of the removal of the import surcharge, and the subsequent rise - they were 2% lower, on average, than during the previous six months. There are thus promising signs of progress towards the achievement of an external surplus in 1967. Sterling has strengthened, and the authorities have been able to acquire a very substantial amount of foreign exchange - nearly all of which has been used to repay earlier short-term borrowings. On 26th January, Bank rate was reduced from 7% to 6½%. The modest reduction indicated the authorities' concern that there should be no general reflation until the external position was more secure. Credit policy remained unchanged.