BNZ holds rate.

Press, 23 September 1988, Page 16

BNZ holds rate.

PA Wellington The Bank of New Zealand has deferred a further reduction of 1 per cent in its base lending rate. On August 15, the bank said it would cut the interest rate by 1 per cent and try to make a further reduction of 1 per cent within a month. At the time, BNZ group chief, Mr Bob McCay, said this would depend on the cost of funds and depositors accepting a lower return on investments. He said he hoped the BNZ’s initiative would be taken up by the market with a positive flow on impact for all borrowers. However, the BNZ yesterday said retail rates have not fallen to the extent expected

following the former Governor of the Reserve Bank, Sir Spencer Russell’s, comments in mid-August. Wholesale markets had in fact tightened slightly, with the easing in wholesale rates evident in early August not being sustained. The bank said not all the major financial institutions took BNZ’s lead in reducing their base lending rates and in fact one had only in the last day or two put its rate up. However, Mr McCay was still hopeful competitive pressures in the retail lending market, and a further easing in deposit rates would restore downward momentum to interest rates. “We see this decision as a pause while we and others take stock.