Operation of monetary policy

Quarterly Bulletin 1995 Q3
Published on 01 September 1995
  • During the second quarter, the Chancellor extended the Government’s inflation objective beyond the end of the current parliament: the aim is a rate of inflation—measured by the twelve-month change in the retail prices index excluding mortgage interest payments—of 21/2% or less.
  • There were indications of significant cost pressures in the quarter, and there continued to be a marked contrast between domestic demand and the traded sector.
  • Official interest rates remained unchanged during the quarter. The decision not to increase rates in May surprised the markets; initially, sterling fell to a new low on a trade-weighted basis and long-gilt yields rose, but market reaction subsequently steadied.
  • The Government announced proposals for a new tax regime for gilts and other bonds, which are likely to facilitate the development of an official gilt strips market.

PDFOperation of monetary policy

Other Quarterly Bulletin 1995 Q3 articles

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