Phillips Says Interest Rates Will Stay Low

Minister of Finance, Planning and the Public Service while calming fears that  the new administration might implement policies which will generate high interest rates, advises that banks need to assist in taking active steps to contain their costs, increase their efficiencies and so contain the growth in their spreads.

According to the Finance Minister, the first aspect of the way forward "relates to macro-economic stability". This, he said, must be maintained and will include low inflation and low interest rates.

"There is no policy of high interest rates and there will be no policy of high interest rates," he emphasized.

Restating the Government's commitment to provide the macro-economic framework that supports low and competitive interest rates, the Minister expressed the administration's desire to "get the rates even lower, if conditions allow."

He argued that macro-economic stability was not an end in itself.

"There is stability now, partly because there is low demand for credit and foreign exchange due to the weakness in the economy. Banks are competing vigorously to lend and, in doing so, are lowering interest rates," he observed.

However the Minister noted that, while this was happening, borrowers were not getting the full benefit and advised that “as rates are lowered, the banks need to assist in taking active steps to contain their costs, increase their efficiencies and so contain the growth in their spreads."