Reserve Bank of Australia Annual Report – 1965 Public Statements

During the year, the following public statements relating to policy matters were issued by the Bank:

10th July, 1964

Statutory Reserve Deposit ratio reduced from 15.5 per cent to 14.8 per cent to complete the transfers to Term Loan Funds announced in February—effective 13th July.

28th September, 1964

Maximum period for which fixed deposits may be accepted by trading banks extended from 15 months to 24 months. Interest rate of 4¼ per cent payable on longest deposits designed to fit current pattern of bank deposit rates and not to increase the general level of these rates.

6th October, 1964

General statement on current banking policies—trading banks to effect some reduction in new lending below recent levels, to keep the increase in advances outstanding within reasonable bounds, and to avoid, as far as practicable, further increases in overdraft limits outstanding.

Statutory Reserve Deposit ratio raised by 1 per cent to 15.8 per cent—effective 14th October.

9th March, 1965

General increase in level of trading bank interest rates to support Reserve Bank policy of monetary restraint—effective 10th March.

Increases of ½ per cent on fixed deposits for periods to 18 months, ¼ per cent on longer deposits and ¼ per cent in the maximum trading bank overdraft rate.

18th March, 1965

Authorised dealers in the short term money market to be permitted to deal in commercial bills that have been accepted or endorsed by a trading bank, and to hold a proportion of their portfolios in bills of this type—effective 22nd March.

19th March, 1965

Rates paid on savings bank deposits to be increased and savings bank lending rates to be reviewed.

31st March, 1965

Statutory Reserve Deposit ratio reduced by 1 per cent to 14.8 per cent—effective 5th April. This would provide only partial liquidity relief for the banks and did not represent an easing of current Reserve Bank policy of monetary restraint.

4th May, 1965

Statutory Reserve Deposit ratio reduced by 1 per cent to 13.8 per cent—effective 5th May. Of the reduction, 0.4 per cent would be transferred to Term Loan Funds and with 0.2 per cent of deposits to be transferred from their L.G.S. assets this would permit banks to continue term lending at a rate consistent with current credit policy. The remaining 0.6 per cent of the reduction would provide some relief from rising liquidity pressures but would not permit any easing of current monetary restraint.

21st June, 1965

Statement on trading bank lending in relation to prevailing drought conditions. Reserve Bank satisfied that, within overall lending policy, traditional preferential treatment was being extended to bank clients affected by drought. The banks' continuing ability to do so was being closely watched in consultation with them.