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Interest Rates

Volume 951: debated on Monday 12 June 1978

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asked the Secretary of State for Prices and Consumer Protection whether he will estimate the effect on the retail price index of the recent increase in interest rates.

Changes in the minimum lending rate have no direct effect on the retail price index, but the 1¼ per cent. increase in the mortgage rate will add about one-third of one per cent. to the index for as long as it is in operation. On the other hand the recent measures—which include an increase in minimum lending rate—will help to keep the money supply under control and thus avoid fuelling inflation.