To: Craig Lieberman who wrote (76663 ) 11/5/1998 8:54:00 AM From: Mohan Marette Read Replies (1) | Respond to of 176387
Breaking News- Bank of England cuts interest rate more than expected. Craig: Here is some good news to go with the morning coffee. ==================================Source:Excerpts from Bloomberg Top News Thu, 5 Nov 1998, 8:44am EST 11/5 Bank of England Cuts Benchmark Rate More-Than-Expected Half-Point to 6.75% London, Nov. 5 (Bloomberg) -- The Bank of England surprised investors by chopping its benchmark interest rate a greater-than- expected 50 basis points to 6.75 percent, the second cut in a month, saying it expects lower growth and inflation next year. The move follows cuts this week by Spain, Portugal and Sweden and by Denmark today, and reflects recession in Asia and Russia as well as a weaker domestic economy, the bank said. This is the first time the bank has changed borrowing costs by as much as half a point since gaining independence in May, 1997, taking the rate to its lowest since Aug. 1997, and indicates it is more concerned about growth than many thought. ''They're clearly worried by the economic environment and have taken a more dramatic step than usual to prevent that deterioration from gathering speed,'' said Keith Edmonds, chief analyst at IBJ International in London. Today's move, the first half-point move since the central bank raised the rate 50 basis points in Feb. 1995, comes as the Bundesbank rebuffed pressure from German Finance Minister Oskar Lafontaine, who attended today's Bundesbank central council meeting, to cut its 3.30 benchmark rate, the lowest in Europe bar Switzerland and Austria. Analysts now expect the Bundesbank to resist any further political pressure and leave cuts in borrowing costs to the European Central Bank next year. Federal Reserve Lead The U.K. reduction, which overturns the central bank's practice of changing rates in quarter-point moves since May, 1997, was immediately followed by similar cuts in base rates by leading U.K. commercial banks, including Barclays Plc, National Westminster Bank Plc and Lloyds TSB Group Plc, which all cut half a point to 6.75 percent. It follows a quarter-point cut by the U.S. Federal Reserve Board three weeks ago prompted by recession in Asia and Russia and fears of a world economic slowdown. While all 18 economists surveyed by Bloomberg News expected the U.K. central bank to lower its benchmark rate, only Goldman Sachs predicted a half point reduction. Today's larger-than-expected move pushed the pound down to 2.7491 deutsche marks from 2.7681 earlier today and drove the yield on the government's 10-year benchmark bond to down 2 basis points to 5.02 percent.............