4 British Banks Up Lending Rate to 10%; Stock Prices Plunge
Britain’s four major commercial banks today boosted their base lending rates by one percentage point, to 10%, prompting the sharpest-ever drop in prices on the London Stock Exchange.
It was the first increase in the base lending rate in almost 10 months.
The Financial Times-Stock Exchange 100-share index, which was up as much as 16.2 points this morning, nose-dived 65.8 points to 2,251.6 by 1:45 p.m. It was briefly down as much as 70.3 points.
The previous record one-day fall for the 100-share index came March 30, when the market was off 54.9 points at 1,993.7.
Fears that Britain’s relatively fast rate of economic growth would spur inflation put upward pressure on money market rates in recent weeks and sparked talk of a possible increase in rates, but many market participants were still surprised by the banks’ move.
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