BANK RATE REDUCED

Press, Volume XCIX, Issue 29384, 10 December 1960, Page 11

BANK RATE REDUCED

| p.c. Drop Has Little Effect

(N.Z. Press Association—Copyright) LONDON, December 8

The British bank rate was reduced today from 5J to 5 per cent. The rate had been at 5J per cent, since October 27. It was reduced then from 6 per cent. This was the third change in the bank rate this year. On January 21 it was raised from 4 to 5 per cent, and on June 23 from 5 to 6 per cent.

A Bank of England spokesman said the reason for today’s reduction was that a bank rate of 5J per cent, was unnecessarily high in relation to rates in other financial centres. He emphasised that the reduction did not signify a change in the Government’s policy of restraint at home. Reuter’s financial editor commented: “The cut will be of some incidental help to Britain’s underemployed consumer trades. It is mainly a gesture of help to the dollar and to Washington’s easymoney policy, which aims to revive American business.” First for 31 Years Today’s London cut is the first time that the bank rate has. been changed in December since 1929. A downward cut in December, designed to repel an inflow of money which was already dwindling, and which hides a grave weakness in Britain’s balance of payments, is very remarkable. In every December up to the end of this century, Britain has to find about 185 million dollars to pay up on her North American debts. Sharemarket Weak The reduction failed to cheer the London Stock Exchange today and there were widespread falls in share prices. If is most unusual for the market not to be stimulated by a bank rate cut, but the news came as no surprise and caused hardly a ripple. Apart from sharp falls in hire-purchase shares, the market opened a little brighter after the recent depression, but caution and uncertainty soon returned and many other shares, including leading industrials, drifted down.