INTEREST RATES

New Zealand Herald, Volume LXXII, Issue 22206, 5 September 1935, Page 13

INTEREST RATES

LONG-TERM LOANS "MAY GO LOWER YET" OPINION OF MR. COATES [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Wednesday The opinion that in the future interest rates might become even lower than their present level was ex-, pressed by the Minister of Finance, Mr. Coates, in the House of Representatives to-day. The statement was made in reply to a question by Mr. J. N. Massey (Government —Franklin), who asked whether, in view of the importance of interest rates in relation to farmers' costs, the Minister could give an indication of his recent inquiries in other parts of the world as to the future trend of interest rates. "At the Ottawa conference in 1932," Mr. Coates said, "the British Empire made a common declaration of policy in support of long-term loan interest rates and undertook to foster whatever steps were necessary to bring such a policy to a successful fruition. In 1933 at the end of the World Economic Conference the British and Dominion representatives reiterated their intention to do everything possible to establish low rates for long-term money. Inquiries I have made recently in various parts of the world show that the British Empire policy has not only been successful, but has been followed by many other nations. "The pressure of money seeking investment is such that a great deal of world stability is necessary before any continuous trend upward is visualised. Short-term money throughout the world is at remarkably low levels and it is becoming apparent in places that rates for long-term mo*hey invested in sound securities are coming more closely into conformity with the low short-term rates. Some authorities consider that interest rates may go lower yet."

LOAN CONVERSIONS GOVERNMENT'S SUCCESS OTHER OPERATIONS SHORTLY [BY TELEGRAPH —SPECIAL HF.PORTF.It] WELLINGTON. Wednesday The success of the present Government in loan conversion operations and tho imminence of further loan conversions were referred to by the Minister of Lands, Sir Alfred Ransom, in the House of Representatives to-night. Sir Alfred indicated that a loan of £5,800,000 at present carrying 6 per cent interest would fall due within 12 months and that three years later another £17,000,000 would require conversion. The Leader of the Opposition, Mr. M. J. Savage, had said the adjustment of overseas debt should be attended to immediately. This was being done by the Government as loans fell due. A loan of £10,135,800 at 5 per cent had fallen due recently. Of this £2,1 .To, 800 had been paid off and the balance had been raised at 3 per cent at £9B 10s. This was the lowest rat<e of the century and the saving in interest amounted to £125,000. Australia's conversion at 3 per cent was only for six years, while New Zealand's arrangement covered 20 years, concluded the Minister.