Govt rift lifts interest rates
By!
PATTRICK SMELLIE
Interest rates swung sharply upwards yesterday, reflecting an increasing view in financial markets that either the Prime Minister, Mr Lange, or the Minister of Finance, Mr Douglas, will have to resign over their economic policy rift.
Rates on five-year Government stock — the main indicator for bank interest rates — broke through the important pyschological barrier of 14 per cent in early morning trading yesterday. They reached a high point of 14.1 per cent, the highest since early March, before falling
back a little.
At close of trading on Wednesday, rates on five-year stock were at 13.92 per cent.
Spurring the rise was the row over the Prime Minister’s decision not to allow Mr Douglas’s press secretary, Mr Bevan Burgess, to renew his contract.
A speech on Wednesday by Mr Lange giving broad support for Mr Douglas’s policy thrust was largely ignored. “Lange’s speech represented a scenario of what economic policy would be like if Douglas were no longer there,” said one senior dealer.
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Press, 9 December 1988, Page 6
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170Govt rift lifts interest rates Press, 9 December 1988, Page 6
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