It has been said that the Bank of England should look to the market rate, and make its own rate conform to that.

This rule was, indeed, always erroneous.

The first duty of the Bank of England was to protect the ultimate cash of the country, and to raise the rate of interest so as to protect it.

But this rule was never so erroneous as now, because the number of sudden demands upon that reserve was never formerly so great.

The market rate of Lombard Street is not influenced by those demands.
That rate is determined by the amount of deposits in the hands of bill-brokers and bankers, and the amount of good bills and acceptable securities offered at the moment.