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Monetary Policy

Volume 526: debated on Tuesday 6 April 1954

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Now for a word on monetary policy. In considering the measures which we need to take, I have made my dispositions this year, as I made them last year, in the knowledge that my Budget will have the support of monetary policy. A year ago I said that conditions in 1953 were likely to require broadly a continuation of the monetary measures then in operation.

That, in the main, is how it turned out. Interest rates generally fell during the year. But few have made the mistake of interpreting those movements as a change of direction in monetary policy; they have been generally and correctly viewed as evidence of the continuous adjustment that must go on if the monetary mechanism is to be kept in effective operation. I shall not offer any predictions on the role that monetary measures are likely to play in the coming year. Bank rates and the rates that depend on it will be kept flexible and free for use in either direction as circumstances may require.