The central bank also said it will cut the
Lombard rate to 0.
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 at 6.
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.
