S.G. Warburg & Co has produced a model showing that if Sterling joins Europe's Exchange Rate Mechanism (ERM) soon at a central rate of DM 2.85, short-term Sterling interest rates will fall to 13 percent by December from current levels of about 15 percent.

Similarly, a central rate of DM 2.70 should produce an interest rate of 12 percent, while a central rate of DM 2.50 would allow interest rates to fall to 10 percent, according to Warburg's calculations.

Readers of the 1989 annual report of

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