Wednesday September 16 1992 - dramatic day interest rates rocketed twice

RW-12-08-11 REMEMBER WHEN REP: CO''September 16th 1992, and interest rates rise by 5% in a day. ''Articles from The News for Remember When.' 'Picture: Allan Hutchings (112724-940)'112724_REMEMBER_WHEN_03/08/11
RW-12-08-11 REMEMBER WHEN REP: CO''September 16th 1992, and interest rates rise by 5% in a day. ''Articles from The News for Remember When.' 'Picture: Allan Hutchings (112724-940)'112724_REMEMBER_WHEN_03/08/11
On the evening of October 23,1970 two tankers collided six miles south of the Isle of Wight. 13 crewmen died.

Flames from the oil tanker Pacific Glory could be seen from Portsdown Hill

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Interest rates have now remained at a record low for a staggering 29 months.

They have been down at a miserly 0.5 per cent for nearly two-and-a-half years. Miserly if you are trying to save, marvellous if you are paying off a large mortgage.

And earlier this week the Bank of England’s latest projections showed it could hold off from raising rates for another two years.

We have all become used to there being no change in the rate in the bank’s quarterly announcement.

But older readers know things have not always been this way.

Remember Black Wednesday? That crazy day in the autumn of 1992 when interest rates soared not once, but twice. In one morning they reached an eye-watering 15 per cent.

That was the day when homeowners considered throwing themselves out of the nearest window as their repayments reached unpayable levels.

The man responsible for the carnage that morning was Tory chancellor Norman Lamont.

First there came a two per cent hike at 11am. That was bad enough.

But then, in the early afternoon, he trumped that with another three per cent increase. Five per cent in a few hours.

The markets, building societies and estate agents could not believe it.

And Mr Lamont’s reasons? He was trying to save the pound.

Later this day, after The News had printed this final, shocking, edition, the government was forced to withdraw the pound from the European Exchange Rate Mechanism (ERM).

It had failed to keep sterling above its agreed lower limit.

That first two per cent rise came after the government had poured billions into the markets in an attempt to shore up the pound.

The News reported: ‘Share prices immediately slumped but regained most of their losses as investors waited for the currency markets to settle.’

Mr Lamont said: ‘As the current extraordinary pressures and uncertainties abate, I hope it will be possible to bring interest rates back down but rates will continue to be determined by whatever is required to maintain sterling’s position within the ERM.’

George Soros, the most high profile of the currency market investors, made more than a billion dollars profit that day by short-selling sterling.

In 1997 the Treasury estimated the cost of Black Wednesday was £3.4bn.

The actual cost of £3.3bn was revealed in 2005 under the Freedom of Information Act.