Based on variation of the discount or Lombard rates
, the Central Bank may influence credit demand by banks and by the private sector.
have varied from 25 to 200 basis points above the central bank's target policy rate or related money market rates.
The central bank said the refinancing rate and Lombard rates
for all maturities were being raised from 50 per cent, placing them at their highest since February 1996.
Until mid-August 1991, the Bundesbank left the discount and lombard rates
unchanged, while the repo rate steadily edged up toward the lombard rate
of 9 percent.
On April 18, the Bundesbank announced that it would cut its discount and Lombard rates
, effectively lowering the range within which German money market rates fluctuate.
In addition, on August 24 the Bundesbank reduced both its discount and Lombard rates
50 basis points, to 3.
When the council did lower the discount and Lombard rates
50 basis points to 6.
Indeed, on July 1 the Bundesbank announced a reduction in its official discount and Lombard rates
of 50 and 25 basis points to 6.
As wage negotiations in Germany became more tense, the Bundesbank moved to increase interest rates both sooner and by a larger amount than the market had expected, announcing 1/2 percentage point rises for both its discount and Lombard rates
on December 19.
On October 5, the Bundesbank announced an increase of a full 1 percentage point in both its discount and Lombard rates
, surprising the market with the magnitude of the increase.
The announcement on April 13 that the Swiss National Bank would increase its discount and Lombard rates
drew market attention once again to the possibility that interest rates abroad might need to be raised.
On the last day of January, the Bundesbank had increased its official discount and Lombard rates
in a move whose timing surprised many in the market.