Bundesbank Won’t Lower Key Interest Rates : Currency: Top official says recent global money market turmoil played no role in Friday’s review.

The Bundesbank held fast against a growing tide of international pressure Friday, refusing to lower key German interest rates, a move experts consider essential to revive flagging economies in much of the industrialized world.

After a meeting here of the bank’s powerful central council, Bundesbank President Helmut Schlesinger declared, “We’re leaving the discount and Lombard rates unchanged.”

However, in a move European financial analysts believe could ease some of the pressure on global money markets, Schlesinger said he would try to hold down another key rate, that for so-called overnight money--very short-term loans to commercial banks.

Germany’s discount rate of 8.25% is nearly three times the U.S. Federal Reserve’s comparable rate of 3%, a disparity that has sunk the dollar to a series of all-time lows against the German mark.

Other major currencies have tumbled against the mark in spite of being propped up by far higher rates.

Noting Germany’s higher-than-desired inflation rate and money supply figures as the country attempts to control the effects of unification with the former East Germany, Schlesinger specifically stated that currency market turmoil played no role in Friday’s review of interest rates.

He said the decision not to lower either the discount or Lombard rates, “is naturally determined by the internal economic problems.”

While the thrust of his comments, made at a news conference after the council meeting, strongly implied that German interest rates will not rise further, he also indicated that there will be no short-term reduction.

“Our policy has been running for some time in the direction of stabilization,” he told reporters. “We know that can’t happen from today to tomorrow. We know we must be patient.”

In Frankfurt, the Bundesbank’s headquarters and the European commercial center that knows Schlesinger best, analysts interpreted his comments as a signal that there will be no swift change in German monetary policy.

“The important message from today’s meeting is that the Bundesbank is not going to move quickly,” said Jutta Kayser, a Frankfurt-based economist for Dresdner International Advisers, the research arm of the Dresdner Bank.

In an apparent attempt to ease the global pressure that has built in recent weeks against the Bundesbank’s policy of high interest rates, Schlesinger and senior aides stressed that the bank wants to hold the overnight money rate at its present lower level of just under 9%.

Overnight money made available Thursday by the Bundesbank was at 8.9%, 0.85% below the rate in early September.

Schlesinger said the Bundesbank has been able to lower this rate by injecting additional cash into circulation.

Elaborating on Schlesinger’s remarks after the news conference, the bank’s chief spokesman, Manfred Koerber, said the policy on the overnight money rate should be interpreted as “a clear signal that there is no intention of raising rates for the time being.”

Financial analysts tended to agree that Schlesinger’s comments were significant.

Brendan Brown, head of research for Mitsubishi Finance International in London, summed up expert reaction this way: “The Bundesbank will in its own way--and that means gradually--ease its monetary policy.”

The natural strength of the German economy, recessions in other industrialized nations and the added attraction of the relatively high deutsche mark interest rates have combined to make the German currency attractive for legitimate short-term investors and speculators.