asked the Minister for Finance the level of the Central Bank rediscount rate as at 1st June, 1970.
Ceisteanna—Questions. Oral Answers. - Bank Rates.
46.
The rediscount rate of the Central Bank of Ireland as at 1st June, 1970, was 7 5/16 percent.
Is this a reduction as compared with three months ago?
No, it is the same.
Would the Minister agree that it is a rather high rate even vis-á-vis the English and continental rates?
No. It is slightly higher for the reasons I gave the Deputy on the last occasion.
It is a bad reflection on the Government rather than on the economy.
47.
asked the Minister for Finance what steps he intends to take to reduce the bank overdraft rate from its present high level; and if he will make a statement on the matter.
I assume the Deputy has in mind the rate of interest charged by the commercial banks for overdraft accommodation. The rate of interest charged varies with the purpose for which the accommodation is obtained and the security offered. I do not agree that any of the present rates represents a crisis rate.
As the Deputy is aware, there is free movement of funds between this country and Britain. Consequently, interest rates here approximate to rates in Britain, which, in turn, are influenced by interest rates in the main financial centres of the rest of the world. To peg Irish interest rates at a lower level would tend to promote an outflow of funds and would also restrict the inflow of much-needed investment capital. I do not propose to take any such action.
Is the Minister aware that within the past 12 months the margin between the Central Bank rediscount rate and the standard overdraft rate has widened by two percentage points and would he like to comment on this disturbing fact?
In the past 12 months?
Approximately.
I do not think that is correct.
Over a period of 12 months there has been this widening, the overdraft rate going up and the rediscount rate going down. Surely the Minister has some comment to make on that peculiar phenomenon?
No, I do not think that is correct, not certainly in recent months. If the Deputy is talking about a change which has taken place it is not a——
Since last year.
——a gradual change; he is talking about some change which if it took place took place about a year ago. It has not been taking place in recent months.
It has taken place over the past 12 months and I want to know why.