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Wednesday, 16 February 1977
Page: 101

Mr UREN (REID, NEW SOUTH WALES) - My question is directed to the Treasurer. Has action been taken recently by official sources to force up interest rates and to compel State governments' borrowing programs to be floated in terms of these higher interest rates? What part do these interest rate increases play in the Government's current economic strategy? Are they consistent with the Treasurer's promises made in the weeks after the devaluation that there would be no such increases?

Mr LYNCH - I do not know what the honourable gentleman means by 'recently'. I can only infer that he in fact is referring to the recently announced terms of the February loan.

Mr Uren - Is not the Reserve Bank functioning in the money market and forcing up interest rates?

Mr Hayden - They have not told you yet, have they, Phil?

Mr LYNCH - I can assure the former Treasurer that this Government has a very effective consultative process with the Reserve Bank, which is more than I can say he had when he was in office. The Deputy Leader of the Opposition would be very well aware that the terms of the February loan are in accordance with the existing yield curve. In no sense do they connote any increase in interest rates. The honourable gentleman is very well aware also of the statement made by me yesterday in relation to the Government's policy on interest rates. Of course we want to see interest rates brought down at the earliest opportunity, but such decisions as may be taken by the Government in the future can be taken only in the context of Australia's rate of inflation.

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