Among the features reviewed by the Governor are:
- Exchange rate instability. There are perhaps two reasons for concern about possible developments in the United States '... whether too much of the burden of combating inflation will not fall to... monetary policy...' and '... the risk that US interest rates... will continue to be volatile.' 'In the conduct of monetary policy it is... consistency, patience and common sense which count, rather than obsessive concern with short-term developments in the monetary aggregates: The steadiness of purpose of the US monetary authorities has earned the confidence of other countries, and none would wish the general anti-inflationary thrust... to be weakened. It would, however, be helpful to use whatever scope exists to moderate the impact overseas.'
In the foreign exchange markets '...the authorities' actions are an important element in the formation of market expectations; and it would be unwise to ignore this channel of influence.'
- Competition from the Far East. Adjustments are needed both from the mature economies and from the more vigorous economies of the Far East. Japan, for instance, will either be forced to slow her export growth or to import more. 'Those sectors of the older industrial economies which no longer have a realistic chance of competing are faced with a loss of markets, which is painful. 'The need then is to ensure a time-scale which reduces the inevitable dislocation.
- The European dimension. The Governor touches on the lack-lustre performance of European economies, reflecting rigidities which have become entrenched over years, and whose eradication will take time and continued effort.