NoL119/12 OfficialJournaloftheEuropeanCommunities 6.5.76
II
(Actswhosepublicationisnotobligatory)
COUNCIL
COUNCIL DECISION
of30April1976
concerningtheadjustmentoftheeconomicpolicyguidelinesfor1976
(76/440/EEC)
THECOUNCILOFTHEEUROPEAN COMMUNITIES ,
HavingregardtotheTreatyestablishingtheEuropeanEconomicCommunity ,
HavingregardtoCouncilDecision74/120/EECof18February1974ontheattainment
ofahighdegreeofconvergenceoftheeconomicpoliciesoftheMemberStatesofthe
EuropeanEconomicCommunity('),andinparticularArticles1and2thereof,
HavingregardtotheproposalfromtheCommission ,
WhereastheCouncilagreeswiththeanalysisoftheeconomicsituationcontainedinthe
Commissioncommunication of3March1976concerningtheadjustmentofthe
economicpolicyguidelinesfor1976,
HASADOPTEDTHISDECISION :
Article1
MemberStatesshallpursueeconomicpolicieswhichconformtotheguidelinessetoutin
theAnnexhereto.
Article2
ThisDecisionisaddressedtotheMemberStates.
DoneatLuxembourg ,30April1976.
FortheCouncil
ThePresident
B.BERG
(')OJNoL63,5.3.1974,p.16.

6.5.76 OfficialJournaloftheEuropeanCommunities NoL119/13
ANNEX
ECONOMIC POLICYGUIDELINES FOR1976
1.Generalguidelines
Needtoconsolidatethe
revival
...butwithout
generatingnewpressures
Budgetarypolicyto
encourageeconomic
activity1.1.Thetrendsobservedinrecentmonthsandthelatestbusinesssurveyssubstantially
confirmtheoutlookfor1976setoutinthe'AnnualReportontheEconomicSituationin
theCommunity'(1).Consequently ,thegeneralpatternoftheeconomicpolicyguidelines
containedinthatreportisstillvalid.Themaintaskistoconsolidatetherevivalby:
—ensuringstrictandpromptimplementation ofthemeasuresalreadydecideduponto
stimulateeconomicactivityand,wherenecessary,prolongingtheapplicationof
certainmeasuressoastoavoidabruptpausesintheeconomicrecovery;
—makingfurtherprogressinthefightagainstinflationandcurbingtheriseinwage
costs,anessentialmoveparticularlyinthoseMemberStateswithlittleroomfor
manoeuvreintheirbalanceofpaymentsandbudgetarypolicies,i.e.Ireland,Italyand
theUnitedKingdom.
1.2InspiteofthegoodprospectsforagradualeconomicupturnintheCommunity ,
uncertaintyandconcernabouteconomicpolicieswillcontinueinallMemberStatesin
1976.Themostimportanttaskwillbetosetthestageforasrapidanimprovement as
possibleintheemploymentsituationandforsustainedeconomicgrowthwithout
generatingrenewedboutsofinflation.
1.3Giventhecontinuinguncertaintyastothestrengthoftheeconomicrevival,budge­
tarypolicyshouldcontinuetoencourageeconomicactivity,byensuringthatdeficitsare
notreducedatanundulyrapidrateandthatinvestmentinthepublicsectorisincreased.
Inordertoachievethenecessarylong-termreductionindeficits,currentexpenditure
shouldbecurbedtocreatemoreroomforcapitaloutlays.InsomeMemberStates,social
infrastructureinvestmentisnotonlythenecessarycorollaryofmoderationinincomes
policy;itisalsoaconditionfortheessentialprocessofadjustmentinthemediumterm.
1.4Monetarypolicyshouldalsoencouragesustainedeconomicrecovery.However,
giventhatthereissofarnoreasontoquestiontheforecastsofcontinuinginflation,the
expansionofliquidityintheMemberStatesshouldbekeptwithinnarrowlydefined
limits.Toachievethis,thefinancingofbudgetdeficitsmustbeseverelyrestricted,and
theincreaseinthemoneysupplylimitedinamannercompatiblewithmacro-economic
objectives .
1.5Ifthereistobesteadyeconomicgrowthandahighlevelofemployment ,invest­
mentofthekindwhichcreatesmorejobsmustbesteppedupconsiderably .Animprove­
mentintheprofitabilityofundertakings isthereforeessential.Ratherthanthroughprice
increases,thisshouldbeachievedbyproductivitygainsresultingfromeconomicgrowth
andbyslowingdowntheriseinproductioncosts.
1.6Theriseinconsumerpricesmustbesloweddownfurtherinordertopreventthe
necessarymoderationinwageincreasesfromresultinginareductionofconsumer
demandinrealterms.Thisimpliesthattheupwardtrendofcontrolledpricesmustbe
rigidlycontained.TheplannedincreaseinindirecttaxesinanumberofMemberStates
should,wherepossible,notbetakenintoaccountinwagesettlements,soastoprevent
chainreactions.Anarrowingofthepricedifferencesbetweenmembercountrieswould
preventexchangeratedisturbancesbetweenthe'snake'currenciesandwouldfacilitatethe
coordinationofmonetarypolicies.StabilityasfaraspossibleinthevalueofCommunity
currencieswouldbeofpracticalhelpindefendingthehard-wonachievements instabi­
lizingpricesagainsttheincreasingpressureofimportpricesandworldcommodityprices.Expansionarybut
cautiousmonetary
policy
Improvement in
profitabilityof
undertakingsessential
Needforfurther
progressinthefight
againstinflation
andforanarrowingof
pricedifferences
(!)OJNoC297,29.12.1975,p.1.

NoL119/14 OfficialJournaloftheEuropeanCommunities 6.5.76
Complementary roleof
socialandemployment
policy
Jointeffortfromthe
varioussocio-economic
groups1.7.Overallmanagementoftheeconomymustbesupplemented byemploymentand
socialpolicymeasures.Selectivemeasuresintheareasofvocationalandfurthertraining
shouldinparticularhelptoreducethehighlevelofunemployment ,particularlyamong
youngpeople,whichisgivingcauseforconcern;forthispurpose,increaseduseshould
alsobemadeoftheCommunityresourcesavailableunderregional,socialandstructural
policy.
1.8Inthecurrenteconomicsituation,totakethemedium-term view,itwouldseem
essentialtoachieveagreatermeasureofagreementbetweenmanagementandunionson
wagetargetsandtheeconomicconditionsunderwhichtheycanbeachieved,soasto
overcomeasquicklyaspossibletheeffectsofthedeeprecessionwhichhasjustended,
resolvetheresultingadjustmentproblemsandputanendtodisputesoverdifferentials .It
isonlybyajointefforttopromoteconfidencethattheexpansionaryfactorsleadingtothe
creationofnewjobscanbestrengthenedandtheupwardmovementinpricesslowed
downfurther.
Thecontinuationofthetalksbetweenthetwosidesofindustry,whichwerelaunchedat
theTripartiteConferencein1975betweenrepresentatives oftheemployers'andworkers'
organizations ,MemberStates'MinistersofEconomicandSocialAffairsandtheCommis­
sion,couldbeofconsiderablehelpinstrengtheningtheeconomyandrestoringtheconfi­
denceofconsumers,investorsandproducersintheCommunity'seconomicfuture.
2.GuidelinesforeachMemberState
withtherestrictivesituationresultingfroman
increasedbalaceofpaymentsdeficit.Toachievethis,
thecentralGovernment'sborrowingrequirement
shouldbemetbypublicloanissues.2.1InDenmark,theeconomicrecoverywhich
beganintheclosingmonthsof1975,followingthe
expansionary measurestakeninSeptember,islikely
tobecomewellestablishedin1976.Itislikelythat
themainelementsinthisrecovery,theexpansionin
privateconsumptionandresidentialconstruction ,will
resultinanincreaseininvestmentinotherareasand
inexports.Unemployment could,therefore,showa
reductionduringtheyear.Certaininflationarypres­
surescouldmakeprogressincontrollingpricesand
costsmoredifficultthanhashithertobeenthecase.
Consequently ,theincomespolicywhichwassuccess­
fullypursuedin1975,willhavetobecontinuedin
ordertoensureabalancedrecovery.2.4IntheFederalRepublicofGermany,the
combinedeffectsofthereflationarymeasuresalready
takenbytheGovernmentandtheFederalBankand
themarkedrecoveryinexportdemandproduceda
distinctchangeintheeconomicsituationinthe
secondhalfoflastyear.Judgingfromtheinformation
currentlyavailable,therecoverywillgather
momentuminthecomingmonths,withtheresult
thatrealgrossnationalproductcanbeexpectedto
growbyanaverageof4to4V2%in1976.Insuch
circumstances ,theauthoritiesresponsible for
economicpolicyshouldbecontenttoawaitthefull
effectsofthemeasuresalreadytakentostimulatethe
economy .2.2Withregardtothebudget,themeasurestaken
toeasedirectandindirecttaxation,whichhave
alreadyprovidedanappreciablestimulus,together
withtheincreaseintransferpayments,produceda
sharpincreaseinthecentralGovernment'snet
borrowingrequirementin1975.In1976,budgetary
policywillremainexpansionary ,buttheexpected
increaseinrevenueresultingfromtheeconomic
upswingandtheplannedcutsincertaincategoriesof
currentexpenditureshouldhelptoreducethisdeficit
bytheendoftheyear.Thiswouldbeawelcomedeve­
lopment,giventhecurrentoutlookfortheeconomy,
andwouldconstitutethefirststageintheattainment
oflonger-termobjectives.2.5Asaresultoftheprogrammesalreadyadopted,
andassumingadeficitofthesameorderofmagnitude
aslastyear,budgetarypolicyin1976willagainhavea
clearlyexpansionaryeffectwhich,inviewoftheslack
intheeconomywouldseeminlinewithshort-term
economicrequirements .Anyextrataxrevenuewhich
mightarisefrom'thegradualaccelerationintherate
ofgrowthshould,however,beusedtoreducethelarge
borrowingrequirement .Thiswouldalsohelpto
improvethechancesofachievingthemedium-term
aimofreducingthebudgetdeficit;thefirststepsin
thisdirectionweretakenwiththelawrelatingtothe
structureofthebudget,adoptedattheendof19752.3.Inthemonetaryfield,theexpansionin
domesticliquidityshouldbecontainedsoastomake
itpossibletoholdinterestratesatalevelcompatible

6.5.76 OfficialJournaloftheEuropeanCommunities NoL119/15
2.6Asregardsmonetarypolicy,theFederalBank
hasadoptedasitstargetfor1976anaveragegrowthof
8%inthecentralbankreserves.Sincethemoneyin
circulationincreasesrapidlyinaperiodofeconomic
expansion,thisrateofgrowthshouldbesufficientto
financetheestimatedriseinproductionandemploy­
mentatthesametimeasgraduallyloweringthe
rathertoohighexistinglevelofliquidityinthe
economy,andcontinuingtoreducethescopefor
priceincreases.2.12InIreland,arevivalofactivitymaytaketime
tomaterialize .Exportscouldgrowataslightlyslower
ratethanin1975asaresultparticularlyofthedropin
thevolumeofsalesofagriculturalproduce.Private
consumption isexpectedtoriseonlyslowly.While
investmentshouldincreaseasaresultofhigherpublic
capitalexpenditure ,theemployment situationis
unlikelytoimproveuntilthesecondhalfoftheyear.
Therateofpriceincreasesshouldslackenbutthe
extentofthisslow-downwilldependonthesuccess
oftheincomespolicy.Economicpolicyshouldthere­
forecentreonthisaspectofthesituation.Inthis
respect,anincomesfreezeuptotheendof1976,as
proposed,could'wellbetheessentialconditionfora
gradualreturntointernalbalancewhichwouldstimu­
latethelongertermprospectsforgrowthandemploy­
ment.2.7InFrance,activityissteadilyincreasinginmost
sectors,mainlyasaresultoftheendofdestocking,
thecontinuinggrowthinconsumerexpenditure ,and
thepubliccapitalexpenditureprogrammescontained
inthe1975plantostimulatetheeconomy.Thepace
oftherecoveryisnotyetsuchthatunemployment
canbeexpectedtofallsignificantlyinthecourseof
1976.Moreover,thereisreasontofearthatprogressin
bringingdowntherateofinflationwillbeseriously
hinderedinthesecondhalfoftheyear.Thegrowthin
imports,whichwillprobablybemorerapidthanthat
ofexports,willturnthesmalltradesurplusrecorded
in1975intoadeficitofthesameorder.2.13Thebudgetpresentedon28January1976,
whichingeneralconformswiththeguidelinesfixed
intheannualreportontheeconomicsituationinthe
Community ,shouldcontributetoalargeextenttothe
realizationoftheseobjectives.Itsmainfeaturesare
considerablecutsincurrentexpenditure ,anappreci­
ableincreaseintaxationandalargeincreaseinpublic
sectorcapitalexpenditure ,calculatedtohaveaposi­
tiveeffectonemployment .Overall,theborrowing
requirement ofcentralandlocalgovernment ,
expressedasapercentageofgrossdomesticproduct,is
expectedtostabilizealthoughremaininghigh.This
wouldrepresentabreakinthetrendobservedinthe
pastfewyears.2.8Budgetarypolicyshouldcontinuetoencourage
therecoveryinactivity.Inparticular,inordertostimu­
lateprivateSectorfixedinvestment ,theauthorities
shouldaimtoimprovetheliquiditypositionofunder­
takings.Fiscalreliefs,forexamplethepostponement
oftaxpayments,couldagainbeused*
2.14Asformonetarypolicy,theauthoritiesshould
endeavourtofinanceasmuchaspossibleofthe
publicsector'sborrowingrequirementbynon-mone­
tarymeans,suchaslong-termpublicloans.2.9Privateconsumption hasstillnotborneasuffi­
cientshareoftheexternalburden,whichwasimposed
twoyearsagobythedeterioration inthetermsof
tradecausedbytheincreaseinoilprices.Thisimbal­
ancecanonlybecorrectedbyadecelerationinthe
rateofgrowthofdisposableincome.
2.15In1975,theeconomicsituationinItalywas
characterized byamarkeddecelerationintherateof
priceinflation,alargereductioninthebalanceof
paymentsdeficitandaslow-downineconomic
activitywhichpersistedintothesummermonths.The
recovery,whichbeganattheendoflastyear,should
continuein1976.However,itshouldbeassumedthat
therecoverywilldeveloponlyslowly,asseveralfactors
—especiallythedelaysintherenewalofcollective
agreementsand,moreimportant,theGovernment
andliracrisesinJanuary—mightcauseindustrialists
toadoptawait-and-seeattitude.2.10Changesinthesystemformonitoringprices
willplayakeyroleinbringingaboutarecoveryin
investment .Thepolicyofeasingcontrolsonproducer
pricesofmanufactured productsmustbecontinued
andshouldbeaccompanied bystrictcontrolsover
profitmargins.Thepressureofforeigncompetition
andtheproductivitygainswhichwillaccompanythe
recoveryshouldtoacertainextentlimittherisksof
acceleratedinflation .
2.11Thepresentmonetarypolicyseemswell
suitedtothiscurrentrecoveryphase.Buttherapid
rateatwhichthemoneysupplyhasbeenexpanding
inrecentmonthswillhavetobegraduallyreduced.2.16ThestrongpressureonthelirainJanuary
forcedthemonetaryauthoritiestostopinterveningon
theexchangemarkets.Asaresult,between20January

NoL119/16 OfficialJournaloftheEuropeanCommunities 6.5.76
thatthe1975reflationaryprogrammesbemaintained .
Infinancialterms,thenetborrowingrequirementwill
showamarkedincreaseoverlastyear'sfigure.
2.20Ascapitaloutflowswillprobablybeinsuffi­
cienttooffsetthesurplusoncurrentaccount,itmust
beassumedthattheoverallbalanceofpaymentswill
remaininsurplus.Asaresult,themoneymarketwill
probablybeabletooperatewithoutconstraint .
2.21Toreducetheriskofaresurgenceofinflation
atalaterstageofeconomicrecovery,itwouldbeadvis­
abletofinancetheTreasurydeficitasfaraspossible
bylong-termborrowing,atthesametimetakingsteps
tomaintaincapitaloutflows.and2March,theliradepreciated ,allowingfor
weighting,bysome13%.Ontheassumptionthat
thisdownwardcourseismaintained ,theItalian
balanceofpayments,whichinanycasewouldhave
worsenedduringtheperiodofeconomicrecovery,
wouldhavetobeartheadditionalburdenofadeterio­
rationinthetermsoftrade.Suchapossibilityisall
themorelikelysinceinItaly,whichisanimportant
processorofrawmaterials,thescopeforelasticityin
importsinrelationtotheirpriceisratherlimited.
2.17Afurtherdepreciation oftheliraandits
harmfuleffectsonthewage-pricespiralcanonlybe
avoided,aswouldbedesirable,byaneconomicpolicy
aimedateliminatingtheStatebudgetdeficitandstem­
mingtheriseinunitwagecosts.Torestorebalanceto
theeconomybothinternallyandexternallytheItalian
authoritiesmustapplyaneconomicpolicyevenmore
stringentthanthatpresentedinCouncilDirective
75/784/EECof18December1975adaptingthecondi­
tionslaiddownforthegrantofmedium-term finan­
cialassistancetotheItalianRepublic(').Arestrictive
policyshouldbefollowedonGovernmentexpendi­
ture,theTreasurydeficitandcreditexpansion .
Thisimpliesacomparatively highlevelofinterest
rates,togetherwithappropriatefiscalpolicymeasures.
Inanycase,animportantcontributionfromthetwo
sidesofindustrytoachievingamoremoderate
increaseinnominalincomesisessential.2.22Theriseinwagecostswillhavetoslackenif
investorconfidenceandtheemploymentsituationare
toimprove.Stepsinthisdirectionhavebeentaken
recentlyandtheseshouldleadinthecourseofthe
yeartoaslowingdownintherateofincreaseof
consumerprices.Itwouldseemessentialtoobtainthe
collaboration ofbothsidesofindustryifsuchapolicy
istobesuccessful .
2.23InBelgium,whereactivitypickedupfairly
rapidlyinthefourthquarteroflastyear,mainlyasa
resultofariseindomesticdemandandinexports,
demandshouldcontinuetogrowduringthefirsthalf
of1976.Thisrecoverywillmainlybebasedonseveral
factors:restocking,increasedpublicinvestment,and
theexpansionofresidentialbuilding;thegrowthin
privateconsumption mayhoweveronlybeslight.
2.24Formostoftheyear,therateofexpansion
willdependpartlyontheimpetusprovidedbypublic
investment .Thereisthereforenoneedtochangethe
generalguidelinesforbudgetarypolicysetoutinthe
annualreportontheeconomicsituationinthe
Community ,whichareinanycasemadeclearinthe
centralGovernmentbudgetfor1976.Theauthorities
could,inaddition,encouragebusinessinvestmentby
effectivelyremovingtheburdenofvalueaddedtax
fromsuchinvestment ,andensurethatthesubsidised
housingprogrammeisstrictlyimplemented .Infollowingsuchapolicy,withtheaimoffighting
inflationandrestoringequilibriumtothebalanceof
paymentsbyasuitableriseinexports,theItalian
authoritieswouldalsobeservingtheinterestsofthe
Communityasawhole.Tothisend,theCommunity
shouldprovideassistance,intheformofaCommu­
nityloan,onconditionthattheauthoritiesdonot
takeanymeasures,eitherdirectorindirect,which
couldimpedeordisturbtradebetweenMemberStates.
2.18IntheNetherlands ,therecovery,whichbegan
inthemiddleoflastyearandwhichbroughtabouta
slightimprovement intheemployment situation,
shouldcontinueduringthefirsthalfof1976.
However,asthelevelofnewordersremainedlowup
totheendoflastyear,itwillbeafewmonthsbefore
afirmbaseforbalancedgrowthbecomesestablished
andspontaneousrecoverytakesoverfromeconomic
policymeasures .
2.19Budgetarypolicymustthereforecontinueto
encourageeconomicactivity.Forthetimebeing,the
centralGovernmentbudgetfor1976mustremainin
linewiththeoriginalguidelines,whichprescribed2.25Withbusinessinvestmentstillsluggishit
shouldbefairlyeasyfortheGovernment tofinance
thebudgetdeficitfromprivatesectorsavings.Despite
thedifficultiesarisingfromthecloseinterdependence
oftheinternalandexternalmarkets,theauthorities
shouldseektoavoidanotherriseininterestrates,or
atleastlimittheextentofanysuchrise.Inthis
contextsomerecoursetoshort-termborrowingcould
beacceptable . (')OJNoL330,24.12.1975,p.48.

6.5.76 OfficialJournaloftheEuropeanCommunities NoL119/17
2.26Thecontinuedriseinpricesgivescausefor
concern.Somereductioninpricesandcostswould
seemtobeaprerequisiteforanylastingimprovement
intheeconomicsituationandparticularlyinthe
labourmarket.Themeasuresenvisagedaspartofthe
recoveryprogrammeareamoveinthisdirection,but
willonlybefullyeffectiveifappliedwithoutdelay.
Thesameistrueforthenewprocedurefortheprior
notificationofpriceincreasesandstrictcontrolof
profitmargins.2.30Prospectsfor1976pointtoasmallbut
gradualrecoveryinoutput,mainlyonaccountofa
sharpreductionintherateofdestocking,arisein
consumerexpenditureinthesecondhalfoftheyear
andanoverallimprovement inthebalanceof
payments,mainlyduetothecontributionfromNorth
Seaoil.Therisingtrendinunemployment isnot
expectedtocometoanendbeforethesecondhalfof
theyear.Asaresultofthepolicyofincomerestraint,
combinedwithcontinuedcontrolsonprices,thereare
goodprospectsthattherateofinflationwillcontinue
todropinthemonthsahead.Toensurethecontinued
successofthecounter-inflation policy,newarrange­
mentswillbeneededtoreplacethepresentpaylimit
fromtheendofJuly1976.Thesearrangements
shouldbecompatiblewiththeover-ridingobjectiveof
bringingtherateofwageinflationclosertothat
obtainingintheUnitedKingdom'sprincipalcompeti­
tors.Thisisanessentialpreconditionforareturnto
higherlevelsofemploymentintheforeseeablefuture.2.27InLuxembourg ,whereactivityseemstobe
pickingupagaininanumberofnewly-established
exportingindustriesalthoughtheordersituationin
theironandsteelindustryisonlyslowlyimproving,it
willprobablybeseveralmonthsbeforetheeconomy
showssignsofasignificantrecovery.
2.31Despitetheveryhigh,andstillrising,levelof
unemployment ,threeimportantconstraints—the
balanceofpaymentsdeficit,inflation,andthescaleof
publicsectorborrowing—makeitnecessaryforthe
authoritiestocontinuetoresistthegrowingpressure
toreflatetheeconomy.2.28Pendingtheentryintoforceofthenewlaw
creatinganunemployment fund,itwouldseemdesir­
abletomaintainonatemporarybasisselective
measuresforavoidingshort-timeworkinginparti­
cular.Thereisnoneedtochangethebudgetarypolicy
guidelineslaiddownintheannualreportonthe
economicsituationintheCommunity .Thecentral
Governmentbudgetfor1976willnodoubtprovide
foralargenetborrowingrequirement .However,
althoughtheexistingbudgetaryreserveshavealready
beensubstantiallydrawnupontofinance,among
otherthings,thecostsofimplementing schemesin
thepublicinterestwhichoccupytheunemployed ,
thereshouldnotbemuchdifficultyinfinancingthis
deficitintheimmediatefuture.Iftherecoveryineconomicactivitywereinfactto
gathermomentumduringthecourseoftheyear,it
wouldbebothnecessaryandfeasibletostartreducing
theborrowingrequirement .Tothisend,itwould
seemadvisabletoimplementstrictlythestatedpolicy
ofextendingthesystemofcashlimitsforwagerises
inthepublicsector,andallowingnofurtherincrease
inpublicexpenditurebetween1976/77andthe
followingthreefinancialyears.2.29Despitetheconsiderable progressmade
recentlyintheUnitedKingdom,inreducingtherate
ofinflationandthedeficitoncurrentaccount,the
annualrateofpriceinflationremainsasourceof
concern.Giventheunforeseendepthoftherecession
andahigherrateofinflationthanwasoriginally
expected,publicexpenditurerosetoahigherlevel
thanplanned,leadingtoalargerpublicsector
borrowingrequirement .Althoughthefinancingof
thisdeficitdidnotpreventaslowingdowninthe
growthofthemainmonetaryaggregatesin1975,it
mightwellresultinamorerapidexpansionofthe
moneysupplyin1976.2.32Thebasicaimofmonetarypolicymustbeto
ensurethat,whenprivatesectordemandforcredit
startstorisemorerapidly,therateofgrowthofthe
moneysupplyasbroadlydefined(M3)remainssuffi­
cientlylowsoasnottoconstituteanobstacletothe
achievementoftheGovernment'stargetforinflation.
Suchapolicywouldhelpmaintaininterestratesata
levelconsistentwiththeneedtofinancetheconti­
nuingexternaldeficit.