Key French Bank Rates Are Lowered : Europe: The cuts are aimed at giving a shot in the arm to the country’s flagging economy.

PARIS — The French government offered a ray of hope to the flagging economy Monday by cutting its benchmark interest rate for the first time in more than a year.

The Bank of France said it was taking advantage of a recovery in the franc and favorable inflation and balance-of-payments trends to reduce its money market intervention rate to 9.35% from 9.60%.

It also trimmed its other main lending rate, for five- to 10-day repurchase agreements, by a quarter point to 10.25%.

With 10.3% of the French work force--nearly 3 million people--unemployed, the government is counting on lower interest rates to give a shot in the arm to the economy ahead of next March’s parliamentary elections.

Finance Minister Michel Sapin said the cut, together with the steep drop in bond yields that has already occurred, would lead to lower borrowing costs for households and businesses.

“It will be favorable for consumption, investment and activity,” he said of the cut in the intervention rate. “I welcome this decision, which has been made possible by the quality of our economy and the solidity of our currency.”

Because money rates in Paris are still more than half a percentage point higher than those in Frankfurt, the franc held rock steady after the cuts at 3.393 francs per mark.

Monday’s moves followed a cut Thursday in the five- to 10-day lending rate to 10.50%. It had been raised to 13% Sept. 23 in a successful attempt to fend off an attack on the franc during Europe’s currency crisis.

Not only have short-term rates since returned to normal, but France has recovered all the $30.6 billion in reserves it threw into the currency battle, Sapin said.

“Our currency is stable and clearly has the scope to rise in the European Exchange Rate Mechanism,” he said.