INTEREST “TOO LOW”

Press, Volume CXIV, Issue 33581, 9 July 1974, Page 2

INTEREST “TOO LOW”

(N.Z. Press Association) WELLINGTON, July 8. The Government should allow trading banks to raise their interest rates as a way of discouraging smaller investors from putting their money into high-risk propositions, said the chief manager for the Bank of New South Wales in New Zealand (Mr F. A. Schulte) today. Mr Schulte said he thought that many of the smaller investors who had put their money in the Cornish busi-

ness empire would have been happier to have left their money in an ordinary savings account. “But,” he said, “who can blame anyone for seeking more attractive interest rates elsewhere in this period when inflation is running at 10 per cent or more.” Although he did not advocate permanently high interest rates, Mr Schulte said the Government should immediately permit the banks to raise interest rates 2 to 3 per cent to give depositors a reasonable return on their money.

These higher rates should be available particularly to larger investors with amount? exceeding $2OOO deposited with the bank. "The present interest rates permitted by the Government in the banking system are negative,” Mr Schulte said. “The Government has enormous problems in dealing with inflation, but I believe it will have to adjust its thinking on this issue to stop money flowing into uncontrolled areas. “A temporary lift in interest rates at this time is highly desirable.”