INTEREST RATES

Nelson Evening Mail, Volume 80, 13 April 1945, Page 2

INTEREST RATES

PUBLIC TRUST OFFICE COMMENT BY MR NASH Christchurch, Apl. 12. “I am concerned with bringing interest rates down to the lowest level, but the decision to reduce the rates on investments in the Public Trust Office has nothing to do with the principle of general interest rates,” said the Minister of Finance (Mr Nash) last evening when he was asked if the reduction made by the Public Trust Office indicated any general lowering of rates. “The reduction applies only to the common fund investments by the Public Trust Office. No general reduction of interest rates has been considered by the Government.” As from Ist April, interest rates paid on moneys invested in the common fund of the Public Trust Office have been reduced to 31 per cent., which was the normal rate, Mr Nash commented. The Government was borrowing money at a lower rate. “As a result of the low rates of interest which have ruled for some years past and are still prevailing, with no prospect of any immediate increase, it has been necessary to review the rates of interest allowed on trust moneys invested in the common fund of the Public Trust Office,” states a circular issued to clients. “These rates are necessarily influenced by the return derived by the Public Trustee from the investment of moneys which, in the aggregate, make up the common fund, and the Public Trustee, in common with other financial institutions and investments generally, has experienced the greatest difficulty in obtaining suitable investments to replace those which, on maturity date, have been repaid. In some cases investments which have fallen due have had to be renewed at lower rates than were formerly obtained, but in others borrowers have, as a result of buoyant financial conditions, found themselves in a position to repay their indebtedness. “As a consequence of the conditions outlined above, large sums have frequently been held temporarily uninvested or placed on short-term investment at very low rates of interest until such time as more suitable investments could be arranged. “The effect of these various factors on the return derived by the Public Trustee from the investment of the common fund has been such that the office has no alternative but to make the reduction on the rates of interest allowed on moneys, whic’i constitute that fund. Accordingly, as from Ist April, 1945. the rate of interest allowed on trust moneys will be 3J per cent, per annum.” The circular goes on to say that the necessity for the reduction in the interest rate was regretted, but that it would be realised that the lowering of the rate had been caused by circumstances “quite beyond the control of the Public Trustee” and that* under existing conditions the new rate of interest “is still a very favourable return.” The benefits to be derived by beneficiaries and clients from the common fund are set out in the concluding section of the circular. The sum of £24,157.287 was held in the common fund of the Public Trust Office at 31st March, 1944, “for sundry estates and funds,” according to the annual accounts presented to Parliament. ’