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I will be explaining one new departure in the Government's own housing
programme to counteract the abrasive effect of inflated land and
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property prices, and also our extensive plans for land production.
Thirdly, while a depreciating Hong Kong dollar helps export
competitiveness, it adds inflationary pressures to the economy. But
another factor which is adding pressure to inflation, or at least is
accommodating it, and is weakening the Hong Kong dollar, is the rapid
growth rate of the money supply which in turn is largely the result
of excessive credit growth. So obviously we have been giving serious
thought to whether or not the growth of the money supply should be
contained, and if so, how it might be done, particularly without putting
further pressure on our industry which remains the backbone of our
economy
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This limits the use that can be made of interest rates.
The recent rise is unavoidable and was made in the belief that banks
will find means of helping industry and exports here.
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But we
sincerely hope external circumstances will permit its reduction as
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soon as possible. The Financial Secretary recently spoke in detail
sedu about the various possibilities of government intervention in the
special circumstances of Hong Kong, and of his strong preference for
restraint of credit by the self-discipline and responsibility of banks
and deposit-taking companies. I heartily agree. We are committed in
principle to as free an economy as possible.
Nevertheless this assumes
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that we as a community have the good sense to act freely without
videntoima undermining our economy.
this
DORS
or ylämansE Obviously recent events cast some doubt on
and the Financial Secretary is watching the situation closely.
/DEVELOPMENT