Relief At Last!

GERMANY’S POWERFUL CENTRAL BANK, THE BUNDESbank, finally did what other European governments have been crying out for since last September — cut interest rates, dropping its key Lombard rate from 9.5% to 9% and discount rate from 8.25% to 8%. The surprise move defused the latest crisis in Europe’s linked exchange-rate system caused by a 10% devaluation of the Irish punt and a fierce attack by speculators on the Danish krone, one of Europe’s strongest currencies. The rate cut also buoyed the sinking British pound, which last year was forced completely out of the currency grid by Germany’s high interest rates. The action should lead to similar cuts in other European countries, ravaged by high unemployment and tottering near recession.