DEPOSIT RATES

Northern Advocate, 1 August 1934, Page 4

DEPOSIT RATES

FURTHER REDUCTIONS t STABILISING POLICY MINISTER’S EXPLANATION (Per Press Association. —Copyright.) WELLINGTON, This Day. A special .supplement of the Gazette issued yesterday contains various Orders-in-Council making further reductions in deposit rates. By way of explanation, the Minister of Finance, Mr Coates, states that the general tendency in interest rates at present is definitely downward, and as this has the effect of lightening the burden of debt and thereby giving a further fillip toward recovery, the Government is steadily pursuing its policy of doing everything possible to stabilise interest rates, at a low level.

The trading banks reduced their deposit rates, as from July 1, by from } ( to per cent,. according to the term of the deposits.

To preserve the proper ratio between trading banks and rates that may bo paid to other institutions, further Ordors-jn-Council have now been passed, operative from August 1, fixing the new rates applicable to new deposits received or renewals of matured deposits as follows: — > TradLoeal Bldg, and ing \ Investm’t Bodies Societies Corns. ’ % % 7o Call ■ ~ 22 2-J Throe months .".. 2$ 2$ 3i Six months 3 3 3$ Twelve months .. 3} 4 Two years 3£ Three years and over The rates quoted for trading companies include stock and station agents, and any extensions previously allowed in respect of shareholders or employees have been eliminated. The reductions involved, in so far as local bodies and building and investment societies are concerned, are \ per cent on the callj rate and 1 per cent on other rates. Thus the relative position as between these institutions and the trading banks has been preserved.

A now rate has been added for deposits in excess of three years, and in the interests of their own financial stability it is hoped that societies will endeavour to do a considerable proportion of their'deposit business on the longer term. “It is also to be observed,” said Mr Coates, “that the rates for trading companies are generally J per cent above those for building and investment societies, and in this ease also provision has been made for a higher rate for deposits in excess of three years. For similar reasons it is hoped the trading companies will make full use of this additional provision. Post Office Bank Terns. “Concerning the Post Office Savings Bank, the rate for deposits in excess of £SOO has been reduced to 21 per cent as from August 1. Deposits up to £SOO will, however, continue to earn interest at the present rate of 3 per cent. In view of this, the rate for trustee savings banks and savings banks departments of building societies will remain unaltered at 3 .per cent. ”

The added that the same Gazette also contained fresh regulations governing the issue of Post Office investment certificates. Under the regulations the present issue, of certificates is withdrawn from sale and the now issue is on offer as from August 1,

The purchase price of the new certificates, which have currency for six years, is based on compound interest over the full period at a rate of approximately 3 per cent. Provision is made, however, for the redemption of the certificates at any time after six months from the date of issue,, thereof, but the redemption values for any short period of'the full currency include interest at varying rates below the 3 per cent to be earned for the full period. Overdraft Easement. “The real object in making these reductions in deposit rates,” continued the Minister, “is to enable further reductions to be made in lending rates, and particularly in bank overdraft rates. At present the situation is largely determined by interest rates on deposit contracts which are still current. “As a result of the discussions I had with the Associated Banks, I can confidently predict a definite reduction in overdraft rates in about three or four mouths’ time. On £50,000,000 of advances, it should be noted that a reduction of 1 per cent in the overdraft rate would mean a saving .of £500,000 to borrowers. Hence any reduction in overdraft rates would lighten the load on industry, as other lending rates mostly move with the bank overdraft rates.

“I anticipate that the ; , country should soon obtain further substantial relief from overhead costs in the form of interest.

EXCHANGE RATES

ASSOCIATED BANKS’ CHARGES

OPERATE FROM TODAY

SLIGHT ALTERATIONS

(Per Press Association.— ■Conyrteht.') WELLINGTON, This-Pay. Tn view of the announcement made by the Reserve Bank of New Zealand on July 10,, the Associated Banks in

New Zealand have decided to adopt the following exchange rates bn London on and after today:— New Zealand • on London (Basis of £IOO London.) I Buying. Selling. , On demand. .. £123 10/- £124 7/6 Three days ... £123 9/- —— Thirty days .. £123 5/- £124 5/Sixty days .... £123 £124 2/6 Ninety davs .. £122 15/- £124 120 days ‘ .... £122 10/- / Telegraiffiie Transfer .. ,£124 10/*;’ New Zealand on Australia. Basis of £IOO Now Zealand.) Buying. . Selling. On demand £lOl .£loo^lo/-. DISCOUNT COSTS RESERVE BANK’S SCHEDULE (Per Press Association.—-Copyright.) WELLINGTON, This Day. ’ The Reserve Bank announces that until further notice the minimum rates at which it is prepared to discount or rediscount bills is 4 per cent per annum. - It is explained that this applies only to bills which are payable in New Zealand and are covered by Section 13 of the Reserve Bank Act, 1933. . Being a minimum rate, it applies only to those eligible bills which , arc regarded as first class. For example, a bill bearing the . name of one of ,the other banks., and one of the principal merchant houses in New Zealand would be so regarded. The Reserve Bank’s discount should not be confused with the overdraft rate of the other banks;