RATES ON DEPOSITS

New Zealand Herald, Volume LXX, Issue 21453, 29 March 1933, Page 10

RATES ON DEPOSITS

A GENERAL REDUCTION EFFECTIVE FROM APRIL 1 MANY CONCERNS AFFECTED [B7 TELEGRAPH —OWN CORRESPONDENT] j WELLINGTON. Tuesday On the eve of his departure for the North, the Minister of Finance, the Rt. Hon- J. G. Coates, referred to the steps now being taken to give effect to the Government's policy of bringing about nn all-round reduction in interest rates. "The outstanding success of the conversion operations has disposed of the matter so far as Government securities are concerned, and local body securities are also covered by the legislation passed last session," said the Minister. "The intention of tho banks to reduce overdraft rates for best accounts to 5 per cent has already been announced, and this reduction will be made ns from May 1 next. I(. now remains for the Government to take action to give effect to the balance of the interest reduction programme as previously outlined in tho House. Savings Bank Rates "Accordingly steps are now being taken to reduce the Post Office Savings Bank rate to 3 per cent as from April 1. The present rate is 3;} per cent on deposits np to £SOO and 3| per cent on deposits above that amount up to tho limit of £2OOO. From April 1, however, all deposits will bear interest at 3 per cent. Concurrently with the reduction in the Post Office Savings Bank rate an Ordcr-in-Council is being issued reducing the' rate [ for the trustee savings banks to the same level, namely, 3 per cent, as from April •1 next. Tho trustee savings bank rate is at present on the same level as that of the Post Office, so this Oider-in-Council does no more than preserve the existing relative position. "In reducing the rates for savings banks i the Government must in equity take steps j to see that they do not suffer as a re- j suit of such action. Accordingly it is necessary to make a further reduction in the maximum rates of interest that may be paid by building societies and investment companies, otherwise funds would Lend to flow from the savings banks to these institutions. , Present and New Deposits "It is realised, however, that building societies and investment companies are affected by the mortgagors' relief legislation, and it is not desired to increase their difficulties. Accordingly the reduction now being made will apply to new deposits only; that is to say. all renewals of de posits at present held by these institutions may be effected at rates within the maxima fixed by the existing Ordprs-in-Council for new deposits. However, the maximum rates that may be paid have been lowered by £ per cent. Under the Order-in-Council now being issued the maximum rates for new moneys will be as follows:—At call, 2£ per cent; three months, 3 pel- cent; six months, 3£ per cent; 12 months, 3£ per cent; two years and over, 4 per cent. These new rates will operate as from April 1. The rates are i per cent above the deposit rates of the banks, which, it will be remembered, were reduced in December last. Local Bodies' Operations "Up to the present 110 Order-in-Council has been issued limiting the rates of interest that may be paid by local bodies for deposits, but in fairness to other institutions. action is now being taken in this direction, and as from April 1 next local bodies for the respective periods concerned will be restricted to rates of interest not exceeding those prescribed for new moneys accepted by building societies and investment companies; that is to say, so far as new moneys are concerned local bodies and investment companies are placed on the same? level, but as local authorities cannot accept deposits for any period in excess of a year the maximum rate that may be paid by any such authority is 3i per cent, the same as is fixed for building societies and investment companies for periods of from six to 12 months The Public Trustee "Finally," stated Mr. Coates, "steps have been taken to reduce the rate of interest that may be paid by the Public Trustee on investments in his common fund. This rate, which is at present 4 per cent, is being reduced to 3£ per cent as from April 1 next. At the same time the maximum rate that may be paid by him on moneys hereafter accepted by him under investment agencies has also been limited to 3£ per cent. In respect of investments already held under such agencies a further 5 per cent reduction in the amount of the interest payable is being made, with a minimum of 4 per cent. The necossary Orders-in-Council, etc., aro being issued to-day in a special Gazette." BUTTER RESTRICTIONS PRIME MINISTER'S VIEWS A DISTURBING SITUATION Hopes that New Zealand might be able to avoid a restriction upon tho importation of its butter into Britain were expressed by the Prime Minister, the Rt. Hon. G. W. Forbes, in addressing a deputation from the Auckland Manufacturers! Association yesterday. Mr. Forbes, however, described the present situation as disturbing and discouraging. "Tho primary industries are having a very difficult time," said tho Prime Minister. "Suggestions of restrictions upon our butter in Britain are in the air, and they are very disturbing. They are only suggestions, of course; there aro 110 definite proposals. The view in the Old Country is that something must be done to rescue tho market from tho position it has got into, which is a serious matter for tho producers. "I hope that there will bo no restriction upon our products," Mr. Forbes continued. "Tho British Government has to look to the interests of its own farmers, who are in a parlous condition owing to tho low prices of their products. They have brought their troubles before tlw Government, and I think they are at the back lof tho suggestion. I hope wo shall get through without any restriction, but the position is very discouraging. This country has made a great effort for years to increase its production, with very satisi factory results, and the future along those lines has been very promising."