Developments in the past few months have been dominated by exchange market tensions-particularly among the European currencies. Continuing tight German monetary policy was reflected in the monetary policy of other ERM members, even where this was at odds with the requirements of the cyclical position in those countries. The resulting strains in the ERM were exacerbated by doubts about the future of the Maastricht Treaty, and this led to the realignment of the lira, and a slight fall in German interest rates, on 14 September. Despite this, speculation in the exchange markets increased as the French referendum approached, and led to the temporary suspension of ERM membership in the United Kingdom and Italy and a devaluation of the Spanish peseta. In the United States and Japan, subdued growth and inflation resulted in a further loosening of policy: in the United States the federal funds rate was eased by a further 25 basis points in September, while in Japan a substantial fiscal package was announced in late August.