Thursday 7th January 1982
Letter from [sic: blank]
Fforde - interest rates, agreed with Chancellor that since ER [Exchange Rate Index] is 91.5 and in spite of high US interest rates, the band should be moved from 14-16 to 13½ - 15½ with the expectations by market of a shift down. Very reluctant for Bank to take an initiative even in spite of good money supply figures (M3 only about +0.3% in Banking December). Would take initiative if ER went above 92 - but then would not need to! - They need to oversupply Money.
Secret Meeting - on Tuesday - not so. Gvr [Governor of the Bank of England, Gordon Richardson] was lunching with C/E [Chancellor of the Exchequer, Sir Geoffrey Howe].
PM meeting with KJ [Keith Joseph] - but interest rates - calls GH [Sir Geoffrey Howe] and he says that meeting with Gvr on Tues they agreed that bands would come down TODAY. Nasty note to GH that I should always be involved in discussions on interest rates. Still Governor says he would reduce bands but not dealing rate! Bullshit.
Cocktail party for 12 industrialists who signed letter to TIMES.