This assessment discusses developments in the economy of which monetary policy will need to take account. World expansion appears less assured in the light of recent developments in the US economy - developments which have also reduced interest rates abroad and thus strengthened sterling. The earlier fall in the exchange rate, while helping to improve the competitive position, has had an adverse effect on prices; but the trend of domestic costs has been favourable. After allowing for the temporary effects of the Civil Service dispute earlier this year, the effect on the broad monetary aggregates of public sector transactions was not expansionary: the underlying expansion of the broad aggregates thus reflects the rapid growth of lending to the private sector.
General assessment