Bundesbank again reduces repo rate

FRANKFURT (AFP): The Bundesbank again slightly reduced its securities repurchase interest rate yesterday when it awarded commercial bank tenders totaling 55.1 billion marks at the marginal rate of 5.70 percent.

The so-called repo rate was three-hundredths of a percent lower than the previous week's, in a continuation of the central bank's recent policy of gradually reducing this rate.

The fact that the reduction was so slight dampened hopes that the Bundesbank might reduce its base rate at today's meeting of its central council, the first for a month.

Dresdner Bank economist Rainer Schroeder said he had been reckoning on a cut of five to seven hundredths in the repo rate. The previous week's reduction was also of three hundredths.

Schroeder said he believed the repo rate was not close enough to the discount rate for a cut in the latter, which has stood at 5.25 percent since February 18.

The German central bank is holding a press conference today after its meeting, at which it is expected to announced its profit for 1993 and the portion which it passes on to the federal state.

Two previous repurchase arrangements for a total 72.9 billion marks fall due today, which will result in a considerable net withdrawal of 17.8 billion from the banking circuit.

The 13-day repo, which takes effect today, was awarded at prevailing rates of 5.70-5.71 percent, against 5.73-5.75 percent the previous Wednesday.

The bank said it had satisfied 66 percent of tenders at the rate of 5.70 percent. The commercial banks had requested a total 97.3 billion marks.

The latest repo falls due April 27.