BANK RATE REDUCED.

Hawera Star, Volume XLV, 3 October 1925, Page 4

BANK RATE REDUCED.

WILL ASSIST TRADE. BY CABLE—PEESS ASSOCIATION—COPYBIGHT. LONDON, Oct. *l. -. The reduction in the bank rate to 4 per cent, surprised everybody, especially because it was not made last week as was expected, when it would have enabled a higher price to be obtained for the conversion loan. Apparently it is now made as there is no longer any anxiety regarding New York exchange, of which the recent weakness roused some fears of withdrawals of gold to America. The reduction is welcomed on the Stock Exchange, which responded with a general marking up of prices of giltedged stock. The reduction is also welcomed by traders generally, who hope it will give a fillip to business. The city editor of The Times says: ‘ ‘ The reduction of the bank rate is "due to the anomalous monetary situation. Following the restoration of the gold standard in April, gold flowed into the country instead of out as had been feared, but the inflow was not on account of the improved trade position, but because moneys deposited could be again withdrawn in gold, which induced foreigners to renew the sterling balances. The flow continued to such an » extent that the bank reduced the rate to 41 per cent, in order to watch the effect on foreign balances. These were considerably withdrawn, but' the monetary rise, nevertheless? continued, rendering the rate totally ineffective. “The bank, therefore, has now decided to try an experiment with the 4 per cent, rate, but the real trouble is the foreign loan embargo, which has been maintained over-long, thereby defeating the working of the gold standard. If the embargo had not existed there would probably have been no need for a reduction of the rate.’’