London Stocks Rise After Bank Rate Cut

Press, Volume C, Issue 29638, 7 October 1961, Page 16

London Stocks Rise After Bank Rate Cut

(N.Z. Press Association—Copyright)

LONDON, October 5. Shares rose immediately on the London Steck Exchange today following the Bank of England announcement just before boon that the bank rate had been cut from 7 to 6i per cent. Gilt-edged stocks added to previous gains and some were soon £1 higher on the day. Industrial shares made .gains of a shilling or more, but dealers reported "no great rush to buy.” A great shout of "Hurrah” went up in the exchange when the news of the cut became known. Interest on bank overdrafts will be reduced from 8 to 7| per cent. Spokesmen for building societies and finance companies said the cut was unlikely to mean cheaper home buying or hire purchase terms because present rates were often based on those prevailing before the bank rate was raised to 7 per cent, last July. The Chancellor of the Exchequer, Mr Selwyn Lloyd, used the higher bank rate last July as part of his move

to curb speeding in Britain. “Reinforcing” Measure A Bank of England state* ment said of today’s cut: “The very high bank rate at 7 per cent was introduced to reinforce the other restrictions on credit (which remain) and to help in relieving the pressure on sterling. “Enough progress has been made towards these short-run objectives to justify the reduction of one half per cent, without prejudicing the attainment of the long-run objectives which the Chancellor of the Exchequer announced in July,” said the statement.

The British bank rate has changed 20 times since the end of the Second World War, but has not stood at 6J per cent, before. The cut in the bank rate was welcomed in South African business circles in Johannesburg as a modest improvement in the chances of increasing exports.