GERMANY/FRANCE: GERMANY'S BUNDERSBANK LOWERS ITS REPO RATE FROM 3.3 TO 3.0 PER CENT

Record ID: 565815

  • Title: GERMANY/FRANCE: GERMANY'S BUNDERSBANK LOWERS ITS REPO RATE FROM 3.3 TO 3.0 PER CENT
  • Date: 3rd December 1998
  • Summary: FRANKFURT, GERMANY (FILE) (REUTERS - ACCESS ALL) 1. LV EXTERIOR OF BUNDESBANK 0.06 (DECEMBER 3, 1998) (REUTERS - ACCESS ALL) 2. SLV INTERIOR NEWS CONFERENCE, BUNDESBANK PRESIDENT HANS TIETMEYER SEATED ON PODIUM 0.14 3. SV SOUNDBITE (German) TIETMEYER ANNOUNCING INTEREST RATE CUT (GERMAN) 1.05 4. SLV JOURNALISTS MILLING AROUND TIETMAYER AT END OF NEWS CONFERENCE 1.13 5. SCU TIETMEYER ASKED BY JOURNALIST WHETHER PRESSURE TO CUT RATES WILL LESSEN NOW / SOUNDBITE (English) TIETMEYER: "You can be sure that pressure is not any decisive element for us. We are not giving in to pressure, we are deciding on our own assessement, and we have done so, and autonomy and sovereignty can be shown also by sometimes doing what some people want to be done" 1.50 PARIS, FRANCE (DECEMBER 3, 1998) (REUTERS - ACCESS ALL) 6. WS/TILT UP EXTERIOR BANQUE DE FRANCE (2 SHOTS) 1.58 7. VARIOUS JEAN CLAUDE TRICHET, DIRECTOR OF BANQUE DE FRANCE, CONDUCTING PRESS CONFERENCE (3 SHOTS) 2.17 9. SCU SOUNDBITE (English) TRICHET "We had cohesion, we had appropriate convergence, and then in close cooperation with all others we reflected on the most appropriate level in the Euro area as a whole, taking all into account". 2.32 10. WS EXTERIOR BANQUE DE FRANCE 2.39 Initials Script is copyright Reuters Limited. All rights reserved
  • Embargoed: 18th December 1998 12:00
  • Keywords:
  • Location: FRANKFURT, GERMANY/ PARIS, FRANCE
  • City:
  • Country: France Germany
  • Reuters ID: LVA6V9R2B75NNFL5FJCCE94SCQOE
  • Story Text: The Bundesbank said on Thursday it lowered its key repo
    rate to 3.0 from 3.30 per cent.

    The German discount rate remains unchanged at 2.50 percent
    and the Lombard emergency financing rate also unchanged at
    4.50


    The founding members of the European Union's single
    currency took financial markets by surprise on Thursday
    (December 3) by slashing their key short-term interest
    rates a month before the launch of the historic project.

    The coordinated move was led by France and Germany, which
    cut their main money market rates to three percent from 3.3
    percent, and was followed within minutes by the other
    countries that will adopt the single currency, the euro, on
    January 1.

    Only Italy, which set a rate of 3.5 percent, was out of
    line with the benchmark rate of 3.0 percent, which Bundesbank
    President Hans Tietmeyer said would be the starting rate for
    the euro bloc on January 1.

    Economists were taken aback by the timing of the cuts,
    which boosted the dollar and stock markets throughout Europe.

    Most of them had not expected a move until the next meeting of
    the fledgling European Central Bank on December 22.

    Germany's Bundesbank, the most powerful central bank in
    Europe, had come under severe pressure in recent weeks from
    new German Finance Minister Oskar Lafontaine to cut borrowing
    costs in order to spur growth and employment.

    Tietemeyer told a news conference at the bank's
    headquarters in Frankfurt that the rate cut was completely
    uninfluenced by political considerations, a view shared by
    many economists.

    "A decision was reached that a further, coordinated rate
    reduction to three percent was necessary," Tietmeyer said.

    With Europe's economy slowing markedly in belated response
    to turmoil in global financial markets, economists said the
    central banks had every reason to cut borrowing costs,
    especially because prices are barely rising in the 11-strong
    euro bloc.

    Jean Claude Trichet, director of Banque De France told
    reporters at a news conference in Paris: "We had cohesion, we
    had appropriate convergence, and then in close cooperation
    with all others we reflected on the most appropriate level in
    the Euro area as a whole, taking all into account".


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