So, even supposing we could influence the exchange rate in the direction we would no doubt all like to see - the hard question for us in current circumstances is could we - and should we - attempt to do so, in order to try to shelter internationally-exposed businesses, if that were to mean putting our objective of sustained low inflation at risk. In fact I’ve not heard anyone argue openly for that - and I would be surprised if they did. The reality is that if we were to put the economy as a whole at any significant risk of accelerating inflation - notwithstanding our mandate - we would not succeed in providing the intended protection even to the internationally-exposed sectors, except possibly in the very short term; and we would jeopardise the prospect of sustained growth in the economy as a whole further ahead. That very clearly was what happened when we sought to hold the exchange rate down against the DM for a time in the 1980s. There is no simple solution to this very real dilemma. And while I really do understand the pain that many internationally-exposed businesses are suffering, I’m afraid my vote must go with those who voted yes on the first ballot. Now let me turn to the second - and quite distinct question - which relates to the practical operation of monetary policy.
Our latest Inflation Report forecast published last week - based on constant 6% interest rates, and on reasonable central assumptions about certain other key elements in the forecast - projects continuing overall output growth - of around 3% initially, moderating to around 2½% from around the end of this year - with continuing low inflation - at a rate of around 2% this year but rising back to around the 2½% target in the course of next year, with the risks - on these assumptions - modestly on the upside. But, given the current uncertainties, individual members of the Committee quite naturally prefer their own alternative assumptions about some of the key variables - most notably the likely future path of the exchange rate and the size and duration of the effect of the downward pressure on margins. And these varying assumptions could either raise or lower the rate of inflation two years ahead by up to ½ percentage point. That, Mr Chairman, is all fairly technical stuff. The point to hold on to is that, on a reasonable range of assumptions, the prospect for the economy as a whole over the next couple of years is for continuing steady growth with low inflation, and most of us would happily settle for that. The debate is about just how strong the growth and just how low the rate of inflation.