Monetary policy in the second half of the 1980s

Quarterly Bulletin 1990 Q2
Published on 01 June 1990

In a wide-ranging review of monetary policy over the past few years, the Governor examines the roots of the recent resurgence of inflation in the United Kingdom, acknowledging that policy mistakes and forecasting errors had played a part in it. He goes on to discuss a number of measures sometimes advanced as alternatives to high interest rates, highlighting their limitations and potential disadvantages. He concludes that there was no real alternative to tight monetary policy, which was a necessary correction of earlier laxity, and that counter-inflationary policy is again on course and will re-establish the basis for future prosperity.

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