Growth in the last twelve months has been more satisfactory in the United Kingdom than abroad. The Budget has set the scene for continued growth and facilitated a reduction in both public borrowing and interest rates which, together with the gain in competitiveness since 1985, should ensure that growth is quite well balanced. While developments abroad are likely to contribute to the restraint of inflation at home, they are in other respects less helpful. World growth has been disappointing and forecasts have been revised downwards: slow growth aggravates trade frictions, which have been much in evidence, and places heavy demands on exchange rates in the adjustment of external imbalances. There was agreement at the Louvre that a period of relative exchange rate stability was desirable. This Assessment discusses the implications of these developments for the pattern of UK monetary policy-making.