GREAT BRITAIN: Steadied Sterling
Six months ago, to fight domestic inflation and to check a flight from sterling so headlong that devaluation seemed due, the Bank of England hiked its bank rate sharply from 5% to 7%, the highest level in 37 years. The shock worked. The flight was reversed: gold and dollar reserves rose $689 million, and by the first of the month stood at $2,539,000,000, best since 1955. In the world's money markets, the pound's worth rose from a low of $2.78 to $2.81. Last week the bank's bowler-hatted runners fanned out again from Threadneedle Street to tell lesser banks and exchanges that its rate was cut. The new rate: 6%.
This limited success does not "imply any general relaxation in monetary policy," the bank announced; inside Britain, the credit squeeze against creeping inflation will continue.
Most Popular »
- The End of Audacity
- The Man Behind Russia's Deadly Train Blast
- Where Did Health Care Reform Go?
- The Pakistani Taliban's War on Schoolchildren
- The Growing Backlash Against Overparenting
- The Toughest Diet
- Why Congress is Furious at the Fed
- World's Most Shocking Apology: Oprah to James Frey
- Toyota's Big Recall Unlikely to Quiet Critics
- China vs. Disney: The Battle for Mulan
- Where China Goes Next
- For Churches, Beefed-Up Security Is a Mixed Blessing
- New Legal Protections for the Elderly
- Is the Dollar Dying a Slow Death?
- A Brush with Gauguin
- Is There Really a Credit Crunch?
- To Help the Kids, Parents Go Back to School
- Should Students Be Paid to Do Well in School?
- The Philippines' Disappearing Dissidents
- The Road on Film: Beautiful, Bleak
More News from Our Partners
Top Stories on TIME.com
Quotes of the Day »
RSS