Germany Reduces Key Interest Rate

Germany’s Bundesbank engineered another small drop in a key money market interest rate Wednesday, triggering several rate cuts in Europe but disappointing markets anticipating a more aggressive relaxation.

Analysts said the central bank’s move was the latest sign of its desire to shed its reputation for dogmatist, anti-inflationary zeal, which its allies say all but wrecked the European Monetary System last month.

The Bundesbank pumped cash into the banking system at a rate of 8.75%, below the 8.9% at which it had fed banks on Tuesday.

The rate cut came shortly before the bank announced that the German money supply grew strongly in September but more slowly than many financial analysts had feared.

The Bundesbank relaxed policy by allowing a fall in the rate at which it supplies cash to the banking system via its weekly tenders for securities repurchase funds.