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Interest Rates

Volume 301: debated on Thursday 27 November 1997

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23.

To ask the Chancellor of the Exchequer if he will make a statement on the changes in interest rates since 1 May. [16607]

I increased interest rates by ¼ point in May. On 6 May I gave the operational responsibility for setting interest rates to the newly formed Monetary Policy Committee of the Bank of England. Since then, the Committee has raised rates by a further 1 percentage point in four equal stages.

26.

To ask the Chancellor of the Exchequer what assessment he has made of the impact of interest rate rises since 1 May on average personal disposable income. [16610]

Interest rates are set by the Bank of England in order to achieve the Government's inflation target, taking account of all relevant economic indicators.

29.

To ask the Chancellor of the Exchequer if he will make a statement on trends in interest rates since 1 May; and what is his policy on interest rate levels. [16613]

Since May, interest rates have been increased by 1¼ per cent. to 7¼ per cent. In the new framework for monetary policy, the Bank of England has the operational responsibility for setting interest rates to meet the Government's inflation target.

31.

To ask the Chancellor of the Exchequer if he will make a statement about his responsibility for interest rate levels. [16615]

In the new framework for monetary policy the responsibilities are absolutely clear. The Government's role is to set the economic objectives and, in particular, the inflation target. The Bank of England's role is to take the operational decisions to meet the inflation target. The Government are satisfied that the new monetary policy arrangements will deliver long-term price stability, and prevent a return to the cycle of boom and bust.

33.

To ask the Chancellor of the Exchequer what forecasts he has evaluated on the prospects for long-term interest rates. [16617]

Long-term interest rates have fallen in recent months, partly reflecting the fall in inflation expectations that arose as a result of the introduction of the new monetary policy framework.

37.

To ask the Chancellor of the Exchequer what representations he has received on the effect of EMU going ahead in Europe on interest rates in the United Kingdom. [16621]

I have received many representations on economic and monetary union and my statement on 27 October 1997, Official Report, columns 583–604, has been widely welcomed in this country and in the rest of Europe. Official interest rates in the UK are set in order to achieve our inflation target.