Inflation
Sir, —You report (January 27) that interest rates are not falling as quickly as the inflation rate. What this means is that real (i.e. inflation-adjusted) interest rates are rising. On page 33 of the same issue it was announced that the exchange rate had hit a new post-float high. The link between high interest rates and high exchange rates is well established. It is clear that the Government is following a policy of reducing inflation by increasing the exchange rate, and using interest rates as a tool, without concerning itself with the question of whether there will be an economy at the end of it all. This is a particularly dangerous policy after a sharemarket crash. — Yours, etc., JOHN RING. January 27, 1988.
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Press, 1 February 1988, Page 18
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124Inflation Press, 1 February 1988, Page 18
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