The review describes developments in various markets, mainly during the period May to July.
The period under review was dominated by the Budget on 12th June and by a growing awareness of the problems facing the economy in the months ahead. Interest rates rose sharply in the wake of the increase of two percentage points in the Bank's minimum lending rate (MLR) announced at the time of the Budget. Sales of gilt-edged stocks were very large.
In the foreign exchange markets, sterling was in demand throughout the period, and the effective exchange rate reached a four-year peak on 26th July. The US dollar eased noticeably between mid-June and mid-July.
The review contains the regular sections on oil money movements, the euro-currency markets and the commodity markets. There is also a brief account of movements in the investment currency premium during the first half of 1979.
Financial review