Lending to be made easier

Press, 3 January 1980, Page 9

Lending to be made easier

PA Wellington Trading bank reserve asset ratios will be eased slightly in January, and there will also be a reduction in Government security ratios applied to trustee and private savings banks r from February. From January, reserve ratios will be set on the basis of an estimated level of free reserves of SSOM.

“This is still a firm position, but it should help moderate interest-rate pressures during the March quarter.” said the Prime Minister (Mr Muldoon). The trustee savings bank' ratio will be reduced by one percentage point (from 39 to 38 per cent) and the private savings bank ratio will be reduced by two percentage points (from 56 to 54 per cent). These reductions will take effect from February 1, 1980, and will release about S34M for investment by the savings banks in the private sector.

However, Mr Muldoon said that domestic inflation rates and a deteriorating external current account meant that monetary policy would need to remain generally firm over the year ahead. Activity has been slowing recently, and it was Government policy to ensure that the economy did not slip into a short-term recession.

“I have already taken some fiscal measures over the last few months aimed at maintaining real economic activity at a stable level,” Mr Muldoon said.