Operation of monetary policy

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

The pace of broad monetary growth increased during the period under review, though growth in MO remained modest. Sentiment in financial markets continued to be dominated by foreign exchange developments, and, with the dollar weakening generally, UK interest rates fell back somewhat from the high levels they had reached at the end of January.

M0 continued to grow steadily during the period under review, so that by mid-April it was just below the middle of its 1984-85 target range; its twelve-month growth rate as at mid-May was comfortably within its target range for 19 85-86. £M3 exceeded its target range for 1984-85 and although its twelve-month growth rate has since declined, it remains well above its 5%-9% target range for 1985-86.

Operation of monetary policy