UK Monetary Policies

Date : 07 September 2001
To : The Editor, Sunday Times
From : Nagindas Khajuria

Subject : UK Monetary Policies

UK Monetary Policies

Exchange Rate : Geoffrey Dicks nightly highlighted the most fundamental problem we have - how to maintain a balance between exchange rate, interest rate, inflation rate and consumer demand (Business last week).

My view is that we should do whatever it takes to bring the British real effective exchange rate back to a realistic, sustainable level.

We could allow interest rates to fall further and further, even below the EU rate. Or we could reduce our target of a 2.5% inflation rate to 1.5%.

Alternatively, we could use the harmonized index that the European Central Bank (ECB) tracks. The Treasury could introduce this in the next budget.

And to limit consumer demand, we could introduce indirect import curbs such as discouraging imports f out-of-season fresh fruits and vegetables and so on.