PARIS MEET AGREED NOT TO PUBLISH BANDS - LAWSON

  U.K. Chancellor of the Exchequer Nigel
  Lawson said the meeting of six major industrial nations in
  Paris last month agreed not to publish any bands in connection
  with their pact to stabilise currencies.
      Questioned by a parliamentary select committee about why
  the participating countries had not announced any bands, Lawson
  replied, "we all agreed it would be much more sensible not to."
  When asked whether that meant an informal joint currency float
  with set ranges was arranged in Paris, Lawson said "I do not
  want to reveal the precise nature of the agreement, so as not
  to make it easy for" speculation against the accord.
      Lawson said the Paris accord presumed that individual
  countries would take corrective action if their currency began
  reacting significantly to domestic macroeconomic factors.
      But if such movements were due to extraneous factors,
  Lawson said the other pact countries would come to its aid
  through concerted intervention on the foreign exchanges.
      "It is clear that both Germany and Japan are having
  difficulty adjusting to their very large exchange rate
  appreciations and making their economies more domestically
  oriented, just as it is taking time for the United States to
  make its own economy more export oriented," Lawson said.
      In his oral evidence to Parliament's Select Treasury
  Committee, Lawson repeated that he was happy with the pound's
  current level, adding that "It is an objective ... To try to
  keep it around that level."
      He said the perception of sterling on foreign exchanges had
  changed since the steep drop in oil prices, largely because the
  pound had weathered that period so successfully. "There has been
  a reassessment of sterling's fundamentals," Lawson said.  He
  disagreed with what he termed "the grossly exaggerated claim"
  that real U.K. Interest rates were much higher than those of
  other major industrialsed countries.
      Using as a reference the key three-month sterling interbank
  rate as quoted in London, Lawson said Britain now had a real
  interest rate level of 5.75 pct - the same as Japan did and
  only a 0.75 percentaage point above the Group of Five average.
      Lawson confirmed that "over the medium and longer term, the
  government's objective is zero inflation."
      He said the government's intention of its PSBR constant at
  1.0 pct of GDP "is the modern equivalent of the balanced budget
  doctrine."  He added that "to allow the debt/GDP ratio to remain
  constant on anything other than zero inflation basis is simply
  a recipe for accelerating inflation."
  

