Germany Lowers Key Interest Rate; Central Bank's Cautious, Half- Point Cut Disappoints Some
Continuing Germany's piecemeal retreat from high interest rates, the Bundesbank today lowered its key discount rate by a half point, triggering similar cuts in several other European nations.</br></br>There was disappointment at the small size of the cut to 7.5 percent from 8 percent and the fact that Germany's central bank also did not reduce the Lombard emergency financing rate, which remains at 9 percent.</br></br>One analyst said the cut was too small to have a significant impact on the economy of European countries.</br></br>"There must be more steps taken," said Dietmar Viertel, an analyst with the Duesseldorf firm of Trinkhaus and Burkhardt.</br></br>The fact that the Bundesbank made any cut at all is seen as an indication that board members were encouraged by a pact signed last weekend between the German government and opposition parties agreeing to a package of taxes and cost-cutting measures aimed at paying for unification.