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The British attempt to manage long-term interest rates in 1962–1964

Published online by Cambridge University Press:  07 April 2016

William A. Allen
William A. Allen*
Affiliation:
Cass Business School
*
William A. Allen, Senior Visiting Fellow and member of the Advisory Board of the Centre for Banking Research, Cass Business School, 106 Bunhill Road, London ec1y 8tz; email: [email protected].
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Abstract

The British monetary authorities tried to encourage lower long-term interest rates through their government debt management operations between 1962 and 1964, following the Radcliffe report's recommendation that they should have an objective for long-term rates, and with the intention of supporting the government's pursuit of faster economic growth. The implementation of the policy was complicated by the Bank of England's role as a market maker in the government securities market, and beset by misunderstandings among the monetary authorities. The policy was abandoned when the conditions of strong market demand for bonds on which it depended changed. The article describes how the policy was developed and implemented, and the impact of political preferences on it.

Keywords

long-term interest ratesdebt managementmonetary policyBank of EnglandTreasurygiltsRadcliffe

JEL classification

N24: Europe: 1913– E52: Monetary Policy H63: Debt • Debt Management • Sovereign Debt E65: Studies of Particular Policy Episodes E58: Central Banks and Their Policies
Type
Articles
Information
Financial History Review , Volume 23 , Issue 1 , April 2016 , pp. 47 - 70
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Copyright
Copyright © European Association for Banking and Financial History e.V. 2016 

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