France Raises Bank Rate

Press, Volume CVIII, Issue 31836, 14 November 1968, Page 13

France Raises Bank Rate

(N ZP.A.-Reuter—Copyright) PARIS, November 13. France last night increased its Bank Rate by 1 per cent, tightened bank liquidity 5 and reduced the credit available to consumers in moves to smother the outflow of capital that has sliced her reserves by almost one-half since the nation-wide strikes in May and June.

The French bank rate, now 6 per cent, is topped among major world industrial nations only by Britain which maintains a near crisis level of 7 per cent

Announcing the new rate and restrictions, Mr FrancoisXavier Ortoli, Minister of Finance and of the economy, disclosed that a fresh flow of capital left France early this month after renewed rumours of an impending increase in the value of the German mark. The Government emphasised that it is speculation, not the balance of trade, that has been responsible for the loss of more than £1250 million of its gold and con-

ivertible currency reserves i since May. By tightening bank liquidity and restricting credit growth the Government hopes to soak up the spare cash in the hands of the public that acts as the main threat to the nation’s reserves, and thus to the official value of the franc. Higher bank rate and the tighter credit will also help combat the inflationary effect of wage concessions granted in July by reducing the public’s capacity to borrow, and by encouraging saving and investment.

Mr Ortoli also announced last night that the trade deficit had shrunk from £7O million in September to £2.75 million in October.