U.K. MONEY MARKET OFFERED EARLY ASSISTANCE
The Bank of England said it had invited
an early round of bill offers from the discount houses after
forecasting a shortage in the system of around 1.1 billion stg.
    Money market dealers speculated that the central bank could
be taking the opportunity to signal a reduction in U.K. Base
lending rates by cutting the rates at which it intervenes in
the discount market.
    Most operators are expecting a base rate cut today,
possibly of one point, following yesterday's budget in which
the U.K. Public sector borrowing target for 1987/88 was slashed
by three billion stg.
    Among the main factors affecting liquidity, bills maturing
in official hands and the take-up of treasury bills will drain
some 1.11 billion stg while a rise in note circulation and
bankers' balances below target will take out around 120 mln stg
and 20 mln stg respectively.
    Partly offsetting these outflows, exchequer transactions
will add some 140 mln stg to the system today.
 REUTER
