S.O.E. loans ‘help keep rates high’

Press, 17 May 1989, Page 1

S.O.E. loans ‘help keep rates high’

By

PATTRICK SMELLIE

in Wellington

Borrowing by State-owned Enterprises was one of a number of factors keeping interest rates up, the Deputy Minister of Finance, Mr Moore, said yesterday. He was answering questions from the Opposition in the wake of increasing sector-group pressure on the level of interest rates.

While most of the blame for high rates has been aimed at the banks on this occasion, the Prime Minister, Mr Lange, has indicated that the way Government agencies borrow could be examined to take some pressure off the money markets. S.O.E.S are main long-term borrowers now. Mr Moore denied Mr Lange had suggested intervention by the Reserve Bank would be considered to decrease rates.

Only the Leader of the Opposition, Mr Bolger, had publicly suggested such a move, he said. The interest rate issue went, quiet on other fronts yesterday, with the new coalition of industry and consumer groups plotting their next moves. The Minister of Finance, Mr Caygill, continued not to involve himself in the highly-public campaign which Mr Lange endorsed on Monday. A spokeswoman for Mr Cay-

gill’s office said the Minister was happy to see the banks and their customers talking about the issue.

Mr Caygill’s only contribution to the latest debate has been to claim that New Zealand banks’ profit margins on lending appeared to have fallen 1 per cent to about 3 per cent in the last year. But this still put them above margins charged in other countries, he said.