PM Transcripts

F78/ 228lt
PRIME MHAINITE
FOR PRESS 1 NOVEM1BER, 1978
INTEREST RATES
The action of the trading banks this evening in reducing
interest rates on a range of bank loans is welcome. This is
particularly so in the case of the .5 percent reduction in the
maximum overdraft rate on loans of less tnan $ 100,000. 1 am
pleased that this reduction will also apply to new term loans
and to new farm development loans of less than $ 100,000.
Earlier this year the trading banks and savings banks reduced
their interest rates on housing loans by .5 percent.
The present action of the banks is an extension of these
reductions to other types of lending.
It is to be expected that, on average, a .5 percent interest
rate reduction will also take place on banks' loans of
above $ 100,000. ilany other private lending rates to
businessmen, farmers and individuals ' have come down during
the past year, by 1 percent and more, and I am hopeful that
these reductions will be followed up in other sections of
the market.
Commonwealth bond yields hnave now come down by up to 1. 7 percent
( in the case of long-term bonds) since September 1977.--
These reductions are consistent with the objective of
maintaining proper control of the money supply. The Government
will continue the policy to lower rates on a sustainable basis
as inflation is reduced and as general economic conditions
permit.
With yesterday's reduction of .25 percent in the interest
rate on Australian Saving Bonds, the interest rate on these
securities has now come down from 10 percent to 8.75 percent
since September 1977. I expect this latest reduction will
soon be followed by reductions in other rates. In the case
of building societies I am pleased to see that various
societies are independently taking action to lower their rates.
Interest rates on housing-loaiis have come down in the case of
permanent building societies, by upward of .5 percent, in
the case of savings and trading banks by .5 percent, and from
finance companies and life offices by about 1 percent.
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