UK MONEY RATES FALL AS BANK APPROVES BASE RATE CUT

  A half point cut in base lending rates
  was announced by the big four clearing banks today after the
  Bank of England finally endorsed such a move following weeks of
  downward pressure, dealers said.
      During its routine intervention in the market, the bank
  trimmed the rates at which it deals with the discount houses by
  half a point and National Westminster led the other clearing
  banks in reducing its base rate to 10-1/2 pct from 11 pct.
      The timing of the Bank of England move took operators by
  surprise after its recent action seemingly designed to dampen
  hopes of a base rate cut ahead of the U.K. Budget on March 17.
         For some time, fundamentals have
  led the market to push for a one point cut in base lending
  rates to 10 pct but the central bank has declined to follow
  wholesale money market rates down.
      Although political considerations -- the government's wish
  to see a fall in base rates coincide with the Budget -- had
  been suggested by operators last week as reasons for the Bank's
  delaying action, worries about the real strength of sterling
  and perhaps about the market's reaction to the content of the
  Budget may have been behind the central bank's caution, dealers
  said.
      In the event, sterling continued firm after the rate cut,
  leaving the market still looking for another half point fall.
      Consequently, rates in the money market eased during the
  day, one-month interbank sterling shedding 5/16 point to
  10-9/16 7/16 and three-months trading 1/16 point down at
  10-5/16 3/16 pct. Sterling cd's were similarly down between
  5/16 point in one month and 1/8 point in one year.
      Overnight interbank money for tomorrow was indicated at
  around 11 pct, almost a point below the levels ruling at the
  end of last week. Today, overnight touched a high of some
  11-3/4 pct after the Bank took out 228 mln stg of an estimated
  300 mln stg shortage.
  

