- Title: GERMANY: BUNDESBANK CUTS INTEREST RATES FOR FIRST TIME SINCE DECEMBER
- Date: 18th April 1996
- Summary: FRANKFURT, GERMANY (APRIL 18, 1996) (RTV - ACCESS ALL) 1. SV BUNDESBANK BRIEFING 0.04 2. SV BUNDESBANK PRESIDENT HANS TIETMEYER SAYING: "WE HAVE TAKEN AN IMPORTANT DECISION TODAY: THE DISCOUNT RATE OF THE BUNDESBANK WILL BE REDUCED FROM 3.0 PERCENT TO 2.5; SECONDLY THE LOMBARD RATE RATE WILL BE REDUCED FROM 5.0 TO 4.5; AND THIRDLY THE REPO RATE WILL BE FIXED AT 3.3 PERCENT (GERMAN) 0.49 3. SV TIETMEYER STANDING UP AT END OF MEETING 0.56 4. SV BUNDESBANK MEMBER OTMAR ISSING SPEAKING (ENGLISH) 1.27 5. ISSING SAYING "I THINK IT'S A CONTRIBUTION TO HELP THE REAL ECONOMY BUT WITHIN THE LIMITS OF OUR STRATEGY." (ENGLISH) 1.39 SEQUENCE 4: TRANSCRIPT: OTMAR ISSING: "WE HAVE FIXED THE REPO RATE FOR THE NEXT TWO WEEKS AT THE RATE WHERE IT WAS SO FAR, I THINK FOR GOOD REASONS. WE ARE LOOKING FOR NEWS ABOUT MONETARY BUSINESS, AND BEFORE THIS DOESN'T CHANGE THERE IS NO REASON TO DO SOMETHING WITH IT." Initials Script is copyright Reuters Limited. All rights reserved.
- Embargoed: 3rd May 1996 13:00
- Location: FRANKFURT, GERMANY
- Country: Germany
- Reuters ID: LVAD9BGAY359SACX5BA7QDOZI3BI
- Story Text: INTRO: The Bundesbank has cut its interest rates for the first time since December 1995, throwing a lifeline to the flagging Germany economy and clearing the way for further rate cuts across Europe.
-------------------------------------------------------------------- The German central bank, the Bundesbank, on Thursday (April 18) slashed 1/2 percentage point off its official discount and Lombard interest rates, giving a lifeline to the flagging German economy and paving the way for rate cuts across Europe.
The Bundesbank cut the German discount rate -- that's the rate by which the bank discounts its lending to institutions so as to increase the amount of cash in the market -- to 2.5 percent from 3.0 percent.
The Lombard emergency financing rate -- used for overnight lending at short notice -- was cut from five percent to 4.5 percent.
The Bundesbank said the decision to cut official interest rates -- for the first time since December -- was based on a favourable inflation outlook. The move takes the discount rate back down to its record low seen in the first half of 1988.
At a news morning news conference, Bundesbank President Hans Tietmeyer said the Repo rate -- the re-purchase rate by which German banks maintain their liquidity levels via Bundesbank funds -- would be unchanged at 3.30 percent for the next two weeks.
His colleague Bundesbank member Otmar Issing explained the Repo rate might come down after the two week period, but that would depend on money supply figures due soon.
The German decision comes just days after the Bonn government was forced to admit that economic growth was far weaker than expected and a 1.5 percent forecast unrealistic.
It also comes hot on the heels of an International Monetary Fund outlook this week showing a sharply lower one percent growth forecast for Germany -- the weakest growth rate among the Group of Seven rich nations.
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