Italy's CB cut interest rates to 3 percent; 11 "in" states on par.
Wednesday December 23
Bank of Italy Cuts Interest Rate
ROME (AP) -- Moving into line with other countries adopting Europe's new single currency, the Bank of Italy said today it is lowering its discount rate to 3 percent.
The reduction from 3.5 percent for the interest charged on loans by the central bank is effective Dec. 28. On Jan. 1, euro is launched by 11 countries -- Austria, Belgium, Ireland, Italy, Finland, France, Germany, Luxembourg, the Netherlands, Spain and Portugal.
The Italian central bank's key rate started 1998 at 5.5 percent, more than 2 percentage points higher than key rates in France or Germany. The bank began to cautiously reduce the gap with a cut on April 21 after European leaders agreed that Italy's budget deficits were being curbed and inflation tamed and said Italy should join European economic and monetary union.
Italy's EMU membership was officially sealed at a special summit on May 3, but the Bank of Italy remained cautious in lowering rates in order to keep the lira, once one of Europe's most volatile currencies, steady.
When it participated in the wave of concerted European rate cuts on Dec. 3, the Bank of Italy stopped short of the 3 percent level struck by all other euro partners. Instead, it cut its discount rate to 3.5 percent from 4.0 percent. |
