ABSTRACT
A period of uncertainty in economic conditions rendered interpretation and analysis even more difficult than usual during the twelve months to April 1961. Following a rise in bank rate in January 1960, further measures were applied in April to restrain demand – the reimposition of hire purchase controls and the first call on the banks for Special Deposits – and within two months a second call for Special Deposits had been made and bank rate had been raised again, from 5 to 6 per cent. Since the end of June, however, no additional restrictions have been introduced; indeed, two small reductions in bank rate have been made for external reasons, and hire purchase restrictions have been eased to assist the industries directly affected. To quote the governor of the Bank of England, the ‘rising boom’ had gone ‘off the boil’ by last autumn. In fact, industrial production in aggregate ceased to rise, and some industries, especially those making durable consumer goods, experienced a sharp fall in demand. Yet the levels of employment and consumption remained high. A second paradox was shown in the external situation. Although the current balance of payments moved heavily into deficit – a development that seems to have influenced the authorities against measures to re-expand home demand – sterling was strong in overseas markets and the gold and currency reserves continued to rise each month until February 1961.
