Main German Bank Raises Interest Rates : Economics: The unexpected half-point increase is seen as an effort to pay for costs related to the Persian Gulf and German reunification.

Germany’s central bank raised its official lending rates by half a percentage point today, surprising many economists.

The move was widely interpreted as an effort to back up Bonn’s financial commitment to the Persian Gulf War, as well as German unification and aid to Eastern Europe and the Soviet Union.

The Bundesbank said it raised the official discount rate to 6.5%, the first increase since October, 1989. The official Lombard rate was boosted to 9% from 8.5%, the figure set last November.

The Bundesbank said the rate increases are effective Friday.

Economists interviewed before the central bank’s meeting said they did not expect immediate rises in interest rates because the market was already skittish over the Gulf War.

But they predicted that interest rates would have to rise in Germany to help the country raise funds for its growing expenditures.

Economists expect the spending spree on the war, unification and foreign aid will have little impact on the German economy.

If there is any economic harm in Germany’s recent generosity, economists say, it is most likely to be felt by the other members of the European Community in the form of higher interest rates.

The Bonn government has so far pledged at least $11 billion to the allied fight against Iraq, including nearly $7 billion in the last two days alone. Other requests for aid are expected.

The pledges are on top of the billions already budgeted for unification costs, as well as the billions promised the Soviets for helping to pave the way for unity. Europe’s most prosperous country is also aiding other East European governments.

“What’s basically required if we’re going to fund wars and the various expenditures that are involved in economic integration in Germany is savings. Investment calls for savings, and savers like to be rewarded, and what rewards savers is higher rates of interest,” said Max Steuer, an economist at the London School of Economics.

But higher interest rates could put the squeeze on other European economies, which want lower rates to encourage economic growth.