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Bank interest rates



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TREASURER

EMBARGO

NO. 115

STATEMENT BY THE ACTING TREASURER

THE HON ERIC L. ROBINSON MP

BANK INTEREST RATES

The Acting Treasurer, Mr Robinson, said today that the Government

welcomed reductions in certain bank interest rates that had been

announced by the Australian Bankers' Association.

Together with the further reductions in Commonwealth Bond and Australian

Savings Bonds rates that were being announced separately today, this

represented a further substantial step in achieving the Govenment's aim

of lowering interest rates on a sustainable basis. They also represent

confirmation of the appropriateness of the Government's overall economic

and financial policies, and the success being achieved with these

policies.

Mr Robinson noted that the principal elements in the banks' announcement

were:

Interest rates on overdrafts drawn under limits of less than

$100,000 would be reduced by 0.5 per cent per annum on or about

1 Dec 1978.

2

. The reduction would apply also to new Term Loans and Farm

Development Loans of less than $100,000.

. A reduction in the maximum on new Personal Instalment Loans from

7.75 per cent (flat) to 7.50 per cent per annum (flat) as from

8 November.

In addition the banks have indicated that rates for overdrafts in excess

of $100,000 could expect to be reduced on average by 0.5 per cent. Some

movement in this direction has already occurred.

The reductions would have a favourable impact on a very wide

cross-section of Australian businesses and individuals. They would

boost confidence, reduce the cost structure, and stimulate capital

expenditure. .

It was also to be expected that today's announcements would have a

desirable effect in paving the way for reductions in other private

sector rates, although that would depend on developments in the

particular sectors concerned.

Further success in achieving interest rate reductions could be expected

on a gradual basis and as a result of the continued and firm application

Of the Government's overall economic policies.

The Government would continue to monitor and review the situation

closely.

CANBERRA

1 Nov 1978