To ask the Chancellor of Exchequer if he will estimate the effect of unsterilised exchange rate intervention on the growth of monetary aggregates over the last 12 months; and if he will estimate any consequent effect on the retail prices index.
The impact of intervention on MO is offset automatically by the Bank of England's daily money market operations. There is no simple relation between the intervention and broad monetary growth. The Government's policy is to fund all intervention, that is, to sterilise it. The published provisional figures for February 1988 indicate that all intervention and other borrowing has been fully funded in the 12 months to that date.