BANK RATE DOWN

Sun (Auckland), Volume III, Issue 916, 8 March 1930, Page 9

BANK RATE DOWN

LOWEST SINCE 1925 INFLUENCE OF NEW YORK British Official Wireless RUGBY, Thursday. The discount rate of the Bank of England was today reduced from 4£ to 4 per cent. The last time this rate was declared was October, 1925. During last year five changes were made, the rate varying from 5 per cent, to 6h per cent. The latter high rate was due largely to the speculative boom, but it had the effect of bringing about heavy deflation, and releasing a large volume of surplus funds. There is still uncertainty over the continued foreign demand for gold, but the definite influence which has decided the bank to lower the official minimum is the fall in discount rates in New York, and indications that the Federal Reserve Bank will reduce its discount rate in due course. The last period in which the London bank rate was 4 per cent, was from October Ito December 3, 1925. On the latter date it was raised to 5 per cent., being again reduced to 4 h per cent, on April 21, 1927. There was no further alteration until February 7, 1923, when the increase to 5£ per cent, was made. Following is a summary of the alterations from that date, together with a statement of the amount of gold held by the Bank of England, as shown by the weekly returns, at corresponding dates: 1929. Rate. Gold Holding. £ February . 7 . . . 5 £ 149,917,446 September 36 . . . 6i 133,212,565 October 31 ... . 6 132,141,823 November 21 . . . 5J 132,103,434 December 12 ... . 5 137,434,418 1930. February 6 . . . . 4£ 151,212,016 March 6 4 152,290,198