The central bank also said it will cut the Lombard rate
This put the so-called Lombard rate
, which the CB charges to banks borrowing overnight with government securities as collateral, up to 8.
For the case of the Bundesbank, our estimates suggest that the Lombard rate
(a rate analogous to the discount rate in the United States) is a marginally better indicator of policy than the call rate, a short-term rate that has been used often as a policy indicator in previous studies.
On November 2, 1990, the Bundesbank raised the lombard rate
from 8 to 8.
The Austrian national bank lowers the discount rate by 1/2 percentage point to 4 per cent and the Lombard rate
by 1/4 percentage point to 5.
Moreover, tight liquidity conditions in the money market consistently pushed the interbank overnight rate above the Lombard rate
, which normally acts as the ceiling for interbank credit.
Subsequently and until mid-1992, policy-controlled interest rates were raised 12 times, culminating in July with a discount rate of 8 3/4 per cent and an unchanged high Lombard rate
of 9 3/4 per cent.
As a result, the flexible lombard rate
fell by 1 1/2 percentage points to 9.
The bank also said that it has kept its lombard rate
flat at 2.
Faced with accelerating monetary growth and a worsening inflation climate, the discount rate was raised from 7 1/2 to 8 per cent and the Lombard rate
from 9 1/4 to 9 3/4 per cent in December 1991.
75 percent, the rediscount rate at 5 percent, the Lombard rate
On 22 December, after a rise in the Lombard rate
in November, the discount rate was raised by 1/2 percentage point to 12 per cent.