Bank Rate Cut Welcomed With Reservations

Press, Volume XCVII, Issue 28542, 22 March 1958, Page 13

Bank Rate Cut Welcomed With Reservations

(N.Z. Press Association—Copyright) (Rec. 9 p.m.) LONDON, March 21.

Yesterday’s reduction of the bank rate to 6 per cent., from the level of 7 per cent, to which it was lifted six months ago, was welcomed today by most British newspapers. Nearly all of them, however, warned that there could be no relaxation yet.

The “Daily Mail” said the bank rate fall was not enough “to set the Thames on fire.” But -it was a welcome sign of economic health and an easing of a “very heavy burden.”

“The Times” said that it might have been more prudent to delay a cut of such a size at least until the summer.

In a leading article the newspaper said that a big cut in the rate ran the risk of being misinterpreted at home.

In the official view the cut should be interpreted more as a response to ‘‘Technical” factors—the strength of . sterling and lower overseas’ interest rates—than as a sign of an intention to resume economic expansion, said the political correspondent of the ‘‘Financial Times.” The ‘‘News Chronicle” said Britain had not yet won the battle against inflation,‘ although the immediate dangers to her dollar reserves had been averted. It was this that made the reduction right. ‘‘lncome Tax Cats”

Both the “Daily Herald” and the “Daily Sketch” today hinted that the Chancellor of the Exchequer (Mr Heathcoat Amory), might follow up yesterday’s bank rate cut with income tax cuts.

The ‘‘Daily Sketch’s” political correspondent said that the Government aimed. at cutting income tax by 2s 6d to around 6s in ihe pound before it left office in about 18 months. The first instalment might come in the budget on April 15.

The announcement of the reduction by the Bank of England, has cheered businessmen, to whom it means lower interest rates on borrowed money. Since the bank rate was drastically raised last September, gold and dollars have been flowing back into Britain’s reserves and there have been big sur-' pluses in overseas trading.