BANK RATE REDUCED.

New Zealand Herald, Volume LXIX, Issue 21112, 20 February 1932, Page 9

BANK RATE REDUCED.

DECISION IN LONDON. CHANGE TO 5 PER CENT. WIDESPREAD SATISFACTION. By Telegraph—Press Association —Copyright. (Received February 10, 5.5 p.m.) LONDON, Feb, 18. The discount rnte. of tlie Bank of England was reduced to day from 6 to 5 per cent, The reduction was hailed with widespread satisfaction. It is considered, in conjunction with the repayment, of the French and the American credits last month, as an indication of a welcome, improvement in the international financial position. Speaking at the annual dinner of the Chamber of Shipping, the President of the Board of Trade, Mr. Walter Runciman, said lie had heard of the reduction of the bank rate with relief. Its importance was far greater than the drop of 1 per cent, suggested, especially with regard to its effect upon industry and upon those who had borrowed to pay their income tax. STIMULATING EFFECTS. STOCK EXCHANGE RESPONSE. RISE IN LEADING SECURITIES. (Received February 10, 5.5 p.in.) British Wireless. RUGBY, Feb. 18. The reduction of the bank rate had a stimulating effect in the City and in the Stork Exchange. It was the first reduction since Britain left the gold standard five months ago. The change came as a pleasant surprise. Rusiness received an immediate stimulus and stock prices generally were marked up. The outstanding feature at the close was the substantial gains registered by all the leading gilt-edged securities. These included the 5 per cent, war loan, which lose by 15s to £99 15s-, the 4 per cent, funding loan, which rose 27s 6rl to £BB 12s 6d; and the 4 per cent. Consols, which rose 27s 6d to £B6 7s 6d. Having been reduced to 2i. per cent, on May 14 of last year, the London bank rate was increased to per cent, on July 25 and to 4£ per cent, a week later, owing to the financial crisis created by the situation in Germany. The increase to 6 per cent, was made on September 21 simultaneously with the suspension of gold payments by the Bank of England. In 1930 the bank rate was reduced from 5 to 3 per cent, bv four steps, on February 6. March 6, March 20 and May J. The final reduction to 2? per cent, did not occur until May 14, 1931. Following is a summary of the bank rates in force in the principal foreign financial centres, showing the date and the character of the last change in each case:— Changed. Fmm .To. Amsterdam . . September -20 2 Berlin . . . . December 0 fi 7 Brussels . . * n New York . . October 15 '2J 31 Paris . . . . October 0 0 '2l Switzerland . . January 22 '2J 2 -July 31. 1930. The lowest rate now in force is 2 per cent, in Switzerland. From May 7 to October 9 last year the New York rate was lj per cent.