Operation of monetary policy

This article covers the three months from mid-May to mid-August 1984.

Underlying monetary conditions taken as a whole remained satisfactory throughout the period under review, despite the erratic behaviour of the monetary statistics. There was, however, severe turbulence in the financial markets in the early summer, arising from concerns about industrial disputes in the United Kingdom, the financial situation in the United States and market anxieties about domestic monetary conditions. The authorities acted to resist the resulting upward pressure on interest rates, as they had in earlier months, but the strength of the pressure was such that there were nevertheless sharp and unwelcome increases in interest rates and bond yields in July. These increases were substantially reversed in August after the market anxieties had moderated.

Operation of monetary policy