Monetary Policy Making In UK, 1974-1997

Over the quarter of a century with which this book is concerned, the UK has had an extraordinarily diverse experience of monetary policy and monetary regimes. Monetary policy has been transformed, from attempts to control broad money from the supply side with the use of indirect controls on banks' lending, to an almost exclusive focus on interest rates in a context of inflation targeting. The exchange rate has at times been fixed, at other times almost perfectly flexible, and at other times again more or less managed. Meanwhile, the real economy has experienced large variations in growth, together with what most observers have seen as a sharp rise and then a gradual decline in the NAIRU; inflation has varied between 25% and 2%. This is a book about the making of monetary policy in the UK, about how and why the monetary regimes changed over the period, and how and why the monetary authorities took the decisions they did about monetary growth, interest rates and the exchange rate. It includes chapters on monetary targeting, policy in the second half of the 1980s, the UK's brief membership of the ERM, inflation targeting between 1993 and 1997, and inflation targeting with instrument independence since 1997. It also contains a detailed analysis of the factors that influenced interest rate decisions and monetary policy concerning the exchange rate, and investigates the reasons for interest rate smoothing in the UK. David Cobham has written a comprehensive history of British monetary policy over the last quarter-century, with sound judgment of the political and economic context, clear writing, and helpful tables and charts. Charles Goodhart and Charles Bean have provided praise for the book.