Mr. Kinnock claimed that the Government is suppressing inflation by devastating the economy.

Into this vacuum stepped the Federal Reserve, slamming on the monetary brakes to reduce demand and, ostensibly, to suppress oil-driven inflation.

Other factors - some of which may be about to run their course - have also played a role in suppressing inflation.

The gamble was that a big jolt of money would rev up the economy while the price controls would suppress inflation.

Under its chairman, Alan Greenspan, the Fed over the last decade has built a record of acting to suppress inflation long before it could infect the economy.

"Without suppressing inflation, it is difficult to speak of a rational, normally functioning economy."

But he will retain Labor's wage and price controls, which he contends have suppressed inflation and preserved jobs.

By 1935 laws to limit price, wage and rent increases were needed to suppress inflation.

Mr. Greenspan said the financial difficulties that had created such volatility in stock markets around the world could even benefit the United States by helping to suppress inflation.

His policies included collective measures to constrain monetary policy, suppress real estate and stock markets, control inflation, lower supplies of raw materials and reduce domestic consumption.