BANK RATE CUT

Press, Volume XCVII, Issue 28618, 21 June 1958, Page 16

BANK RATE CUT

Gold And Dollar Reserves Up (N.Z Press Association—Copyrtgnti (Rec. 7 p.m.) LONDON, June 19. The British bank rate reduction by i per cent to 5 per cent, today was the third cut in the rate since it was raised in September, 1957. These have brought the rate back to where it stood before the 2 per cent. Increase in September. Since then, the sterling area's gold and dollar reserves have steadily improved until today they stand at the highest level Since September, 1951. Reuters’ financial editor said that the run on sterling had been reversed. Since September, Britain has enlarged her gold assets by about 60 per cent., to their highest level since the Conservatives took office in October, 1951. Liabilities Down Simultaneously, Britain has pared down her sterling liabilities, as India, New Zealand and other hard-pressed countries have drawn on their sterling balances. These balances, which are largely the relic of war debts, have turned out to be an Invaluable help to the international money, and credit systems. In general, the British bank rate is following the world trend towards lower money rates, but slowly and cautiously. To the extent that they are anything more than technical, bank rate cuts are a gesture to the hardpressed commodity producing countries which are important markets for Britain's exports. The rate affects the holding of stocks far more than it affects capital investment. Until the United States and Germany can re-expand their economies and stop cutting their stocks, commodity prices may not derive much positive benefit. But the passing of higher money rates in Britain does at least alleviate one of the handicaps of the commodities. There was no immediate reaction on the London Stock Exchange to the cut in the bank rate.