Minister’s warning on interest rates

Press, Volume CXII, Issue 32975, 22 July 1972, Page 3

Minister’s warning on interest rates

(A’ew Zealand Press Association) WELLINGTON, July 21. The Minister of Finance (Mr Muldoon) is disturbed that neither borrowing nor lending rates are easing, and in some cases continued to increase towards the end of 1971 and in the early months of 1972 as funds became more readily available.

He tokl the Finance Houses Association in Wellington today that he was well aware that administrative costs of financial institutions had increased very rapidly, with the rapid increase in wages and salaries.

“But the Government is

not prepared to see our in-

terest rate structure continue to increase on a percentage ! basis regardless of economic ■ I conditions,” he said. I “You will be aware that !■ ihave deliberately opted for a low interest-rate policy at a time when international interest rates were hitting very high peaks, and that I remain unconvinced that the interest J rate as an economic weapon: would be effective in the New Zealand economy unless it was to swing over a range that would be intolerable. ; “It is not possible to argue .from this that rates of inter-: test are therefore unimportant. “In fact, the reverse is the case, and the view of the: Government is that the greatest importance must be at-' tached to interest as a cost.”: Mr Muldoon confirmed that the forecast he made a few ; weeks ago, of a general wage; increase in October of be-; tween 4 and 5 per cent,: would now be realised. “And ff we have continued restraint by' all parties, employers, trade unionists and the Government, the dangerous wage-price spiral of recent years will become a| thing of the past.” he said.