LOWER INTEREST.

Auckland Star, Volume LXV, Issue 139, 14 June 1934, Page 4

LOWER INTEREST.

DOMINION RATES FALLING. INFLUENCES IN NEAR FUTURE. Interest rates have been falling steadily in the Dominion since the conversion of the internal national debt early last year, and it is expected that still lower levels will bo touched when the present large accumulation of money for investment is swelled still further after the Reserve. Bank begins its operations in August. When the Keservc Bank takes over the note issue of the country, and assumes control of surplus New Zealand credits in London, much money will bo released through the trading banks. The weight of this money will have the effect of forcing down interest rates. The opinion is held that the Government may also take action to reduce certain rates and bring all interest as far as possible on to an even basis. In anticipation of the big surpluses they will have in hand when they receive payment for London balances in Keservc Bank notes, the trading banks have recently shown keenness to invest, and have taken over accounts wherever possible. Call money is plentiful in New Zealand at present, the rate being 2V4 per cent. Loans have been negotiated in certain instances as low as 2 per cent, and there is plenty of money available at about the savings bank rate of 3 per cent. The reduction of interest'that has gone on has had its influence in the share market, where securities have been affected. A typical instance is the stock of one of the building societies, which has been rising steadily till it is now at ; a premium. It has paid ft per cent regularly for some time, n.nd the shares have appreciated 50 per cent in the last two years.