Interest rates will rise, says Labour

Press, 10 May 1984, Page 5

Interest rates will rise, says Labour

PA Wellington Interest rates will rise and there will be a shortage of finance because of the Government’s finance company regulations, Labour’s finance spokesman, Mr Roger Douglas, has said.

“Some companies are going to cut down on lending and some people will be forced to borrow from the fringe financiers at high interest rates,” Mr Douglas said.

On Monday regulations were announced increasing the ratio of Government stock required to be held by

finance companies which have exceeded lending growth guidelines this year. The New Zealand Finance Houses’ Association said the regulations would force finance companies to invest an extra $lBO million in Government stock which would otherwise have been available to the commercial and personal finance markets. Mr Douglas said the regulations seemed to be yet another instance of retrospective application of Government regulations.

The chairman of Fletcher Challenge, Mr Ron Trotter, said that a black market for interest rates could develop as a result of the Government’s latest move to control lending by finance companies. Mr Trotter, in Hastings to chair a meeting of his company’s board, said although he had not had time to study the Government’s move in detail, he regarded the financial market as a place where supply and demand prevailed. The Government was trying to suppress the nor-

mal market influences and as pressure built up, more regulations and controls would be required. The Opposition’s associate finance spokesman, Mr D. F. Caygill, criticised the Prime Minister for announcing finance company regulations without ensuring copies of the regulations were available. “Yet again we have a situation where a law is being applied but no-one can see what the law actually is,” Mr Caygill said.