General assessment

Although the assessment of underlying trends has been complicated by the miners' dispute and the dock strikes, the economic recovery seems to be continuing, possibly at a slower rate, and inflation is less than many had forecast. Financial markets, already unsettled by the industrial disputes, were also confronted by erratic movements in the monthly monetary figures. Financial sentiment has continued to be rather volatile in the United States in recent months. Economic growth there in the second quarter again exceeded expectations; more generally, activity in the main industrial countries has quickened and broadened, though has remained slow in Europe. Strong productivity growth and weak commodity prices are both helping to restrain inflation in industrial countries. This forms the background for discussion of domestic monetary policy and economic prospects.

General assessment