REDUCED BANK RATE.

Manawatu Standard, Volume LII, Issue 69, 20 February 1932, Page 7

REDUCED BANK RATE.

STIMULATING EFFECT. REACTION IN STOCK MARKET. (British Official Wireless.) RUGBY, Feb. 18. The reduction of the Bank Rate from 6 to 5 per cent, has had a stimulating effect in the city and on tire Stock Exchange. It was the first reduction since Britain left the gold standard five months ago. - The change came as a pleasant surprise and business received an immediare stimulus. Stock prices generally were marked up. The outstanding feature at the close was the substantial gains registered by all leading gilt-edged specialities. These included War Loan 5 per cents., a rise of three-quarters to 99J; also the Funding Loan, 4 per cent., which showed a rise of one and three-eights to 88 5-8. Consolidated 4 per cent, showed a rise of one nnd three-eights to 86 3-8.

Sir Walter Runciman, speaking at a Chamber of Shipping dinner, said he had heard of the reduction in the bank rate, which would afford relief far exceeding one per cent.

The Bank of England in reducing the discount rate by 1 per cent, from 6 per cent, to 5 per cent, has departed from the usual practice, which is to reduce it at the rate of £ per cent, and raise it by 1 per cent, at each move. But this latter procedure was not observed, when on December 20 the rate was jumped from 4£ per cent, to 6 per cent. The reduction was not unexpected even in New Zealand, for it was obvioUß that from the repayment.' of the credits obtained in France and New York, the healthy outlook for .the British Budget, and the steps token to protect British trade that the safeguard of a high bank rate was not bo imperative. The reduction. is, in itself, an indication of the vastly improved conditions of British economics. The last occasion on which the rate was 5 per cent, wag on December 12, 1929, when that rate held until February 6 in the following year. There have been several movements in the bank rate since the beginning of. 1931. Throughout 1930 there was a steady drop in the rate, and on Mnreh 20 of that year the rate was reduced from 4 per cent, to 3£ per cent. The movements since have been as under:

1930, March 20 . 3A per cent. 1930, May 1 reduced tro .. . 3 per cent. 1931, May 14, reduced to .. • 2 h per cent. 1931, July 23, raised to ■ 4 per cent. 1931, July 30, raised to • 4 per cent. 1931, Sept. 20, raised to 6 per cent. 1932, Feb. 18, reduced to .. . 5 per cent.