asked the Secretary of State for Prices and Consumer Protection what effect he estimates the 2½ per cent. increase in minimum lending rate will have on the retail price index in the period up to the end of 1979.
Changes in the minimum lending rate have no direct effect on the RPI, but the recent increase in the mortgage rate will add about one half of one per cent. to the index for as long as it is in operation. On the other hand, a rise in interest rates was necessary to keep the growth of the money supply within the announced targets, which is essential if we are to keep inflation under control.