asked the Minister for Finance if there are proposals to increase the bank rate in this country; and, if so, whether he will take any steps to relieve house purchasers and business.
58.
Ceisteanna—Questions. Oral Answers. - Bank Rate.
57.
asked the Minister for Finance whether as a result of the recent rise in the British bank rate similar increases will occur here; and whether he foresees any possibility of the bank rate in this country being reduced in the coming year.
With your permission, a Cheann Comhairle, I propose to take Questions Nos. 57 and 58 together.
If the Deputies have in mind the rediscount rate of the Central Bank, I can give no advance information about any change. The rate is normally fixed at monthly intervals by reference to the arrangements relating to public issues of Exchequer Bills. The rediscount rate is continually under review by the Central Bank.
As regards the lending rates of the commercial banks, the position is that, since there is free movement of funds between Ireland and Britain and also a close link between the banking systems of the two countries, the levels of the lending rates of the Irish banks are related to the British levels. Following the recent rise in the British bank rate, the rates of interest charged on advances by the Irish banks will be reviewed by the Irish Banks' Standing Committee which will take into account the views of the Central Bank.
I have no statutory control over the interest rates charged by financial institutions.
Will the Minister give an idea as to when this review will be completed?
Very soon.
Would the Minister agree that a protracted delay between the fixing of the bank rate of the Bank of England and a decision by the Central Bank of Ireland is calculated to mean considerable inconvenience in commercial centres in Ireland and would he suggest to the Central Bank that their decision in a matter of this kind might be made public as soon as possible?
That matter will be decided almost immediately. The important thing in this connection, I think most Deputies will agree, is that we should safeguard our deposits.
I am not going into the merits of that. All I say is this: Will the Minister agree with me that a protracted period of uncertainty between a dramatic change in the bank rate in Britain and a decision here as to what it is expedient to do in our present circumstances is undesirable?
I would not accept that as a general principle.
All I want is a decision as to whether they are going to follow.
I was afraid there was an assumption in the Deputy's question that we should change.
No, no assumption. I said a decision.
Is it not a fact that since 1955 or 1956 there has been a slight differential between here and Britain and that that is continuing?
What happens is that we look at the situation—when I say "we" I mean the Central Bank, the commercial banks and my Department —and we try to see what would suit our circumstances. Formerly there was an automatic following but in more recent times there has not been an automatic change here. Sometimes when they have gone up we have gone up but not quite so much and following that very often when they come down we do not come down quite so much, but it is always decided in relation to our own best interests.