The gilts market after Mr Clarke

Article Abstract:

UK interest rates have been reduced by 0.25% in Jun 1996. The impact of this reduction on the market for government securities is unclear. Some analysts see the rate reduction as having been undertaken for political reasons and fear that inflation could result from loose monetary policy, pushing up long bond rate. This could lead to the government having to tighten monetary policy in what could be an aggressive manner. Investors appear less concerned that the UK Labor party may win an election as is shown by a rise in the value of pound sterling.

Economic aspects, Prices and rates, Interest rates, Commodity futures, Sows

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UK economy: a Clarke boomlet

Article Abstract:

Monetary growth in the UK has led to increased liquidity and a rise in the price of assets like shares, houses in London, England, and farmland. The increase in spending is not a boom in the sense of previous booms which gained notoriety, but could be called a boomlet. The UK chancellor, Kenneth Clarke, does not appear to be concerned about increases in the growth rate of the money supply, and this is because he is a politician who also faces a general election in a few months from Oct 1996.

Money Supply

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Britain moves into a money muddle

Article Abstract:

The UK chancellor, Kenneth Clarke, has reduced interest rates though the money supply is increasing, measuring using the M0 and M4 methods. The rises in M0 and M4 could be due to quirks rather than longer-term trends that should be cause for concern. Special circumstances include a drop in cash holdings in 1992, and the rise could simply be recovery to normal levels. Lower interest rates also means that more funds are held in cash which does not provide interest.

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