asked the Minister for Finance if, in order to reduce the cost of house purchase and other capital investment, he will take steps to reduce the bank rate; and if he will outline his powers in this regard.
18.
Ceisteanna—Questions. Oral Answers. - Bank Rate.
17.
asked the Minister for Finance if he will take steps to ensure a reduction in the rate of interest of mortgage loans from all Irish financial institutions.
I propose, with your permission, a Cheann Comhairle, to take Questions Nos. 17 and 18 together.
I have no statutory powers in relation to the rates of interest charged by banks or other financial institutions on loans and advances.
In view of the fact that a reduction took place in the British bank rate recently, would the Minister suggest to the Irish banks that they should reduce the rate here, particularly since they have been so anxious and prompt in increasing the bank rate as soon as the British increase theirs?
That is not so.
Immediately, or within a few weeks——
On the last three or four occasions, we did not follow them.
Because we had not reduced the bank rate here.
This is a complicated matter. We are also concerned with the rates the banks can pay on deposits and they are related to overdraft rates.
Is the Minister not aware that the banks have so much because of the exorbitant bank rate and is he aware that the people are not able to negotiate loans due to this high bank rate? It is impossible to consider a bank loan.
It is not possible to be a financial island. We must have regard to the general world situation in respect of interest rates. Money is a very volatile commodity which moves very easily in and out of different countries. We must ensure that we protect our deposits here. A very important point is the rate banks pay on deposits and this is related to the interest charged on overdrafts. We watch the situation very carefully in conjunction with the banks. The Deputy no doubt has seen recently that the Americans have been forced, in the interest of protecting their financial situation, to increase the bank rate very considerably to one of the highest levels it has ever reached. It is a bit silly to be trying to give facile answers to this problem.
Does the Minister agree the bank rate here is the highest in Europe?
I do not. That is nonsense.
Despite the fact that the US bank rate is the highest ever, it is still much lower than ours. The Irish bank rate being so high has had a depressing effect on the economy because small businesses and house purchasers cannot avail of loan facilities.
I find myself disagreeing with practically everything the Deputy has said.