XN000022-1992-06-03 — Page 14

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WEDNESDAY, JUNE 3, 1992

IN ORDER TO AVOID SO FAR AS POSSIBLE THE RE-EMERGENCE OF OVERHEATING IN THE RESIDENTIAL PROPERTY MARKET, MR NENDICK SAID THE GOVERNMENT HAD EXTENDED THE AMBIT OF LIABILITY TO STAMP DUTY AND BANKS HAD BEEN ADHERING TO A TIGHT POLICY IN RESPECT OF RESIDENTIAL MORTGAGE LOANS.

THE

ALSO, IN ANNOUNCING THE RECENT CHANGES IN DEPOSIT RATES, THE CHAIRMAN OF THE HONG KONG ASSOCIATION OF BANKS (HKAB) MADE IT CLEAR THAT NO RELAXATION OF THE PRESENT CRITERIA FOR SUCH LOANS WAS CONTEMPLATED.

A WORKING GROUP CHAIRED BY THE SECRETARY FOR PLANNING, ENVIRONMENT AND LANDS IS LOOKING AT POSSIBILITIES OF ADDRESSING THE HOUSING NEEDS OF THE MIDDLE INCOME GROUP.

MR

NENDICK SAID LATEST STATISTICS REVEALED THAT INFLATIONARY PRESSURES HAD BEEN MODERATING AND IT WAS HOPED THAT THE RATE OF INFLATION FOR THIS YEAR WOULD BE CONSIDERABLY LOWER THAN IN 1991.

HE SAID INFLATIONARY PRESSURES IN RECENT YEARS HAD ARISEN FROM A STRUCTURAL CHANGE IN HONG KONG'S ECONOMY INTO A SERVICE-ORIENTED

ECONOMY.

THE GOVERNMENT HAD BEEN TACKLING INFLATION BY ADDRESSING THE SUPPLY SIDE CONSTRAINTS SUCH AS LAND AND LABOUR, HE SAID.

ON THE GOVERNMENT'S INTEREST RATES POLICY, MR NENDICK SAID IT WAS CENTRED AROUND THE MONETARY OBJECTIVE OF MAINTAINING EXCHANGE RATE STABILITY NEAR TO 7.80 UNDER THE LINKED EXCHANGE RATE SYSTEM.

**

"WHEN IT IS FELT APPROPRIATE TO DO SO, GOVERNMENT WILL TAKE ACTION TO INFLUENCE INTEREST RATES WITH THIS OBJECTIVE IN MIND, MR NENDICK SAID.

HE SAID THE GOVERNMENT WOULD NORMALLY EXERT ITS INFLUENCE, THROUGH MONEY MARKET OPERATIONS, ON INTERBANK INTEREST RATES.

"BUT AS RETAIL DEPOSIT INTEREST RATES CANNOT FOR LONG BE SIGNIFICANTLY OUT OF LINE WITH INTERBANK RATES, AS THIS WOULD RESULT IN THE BANKS' SUFFERING LOSSES OR MAKING UNDUE PROFITS, THE (HKAB) NEED TO TAKE ACCOUNT OF THE INTERBANK RATES WHEN SETTING DEPOSIT INTEREST RATES.

**IT IS THROUGH THIS INDIRECT MARKET-RELATED PROCESS THAT GOVERNMENT EXERCISES ITS INFLUENCE OVER DEPOSIT INTEREST RATES SET BY THE ASSOCIATION, HE SAID.

MOREOVER, IN ACCORDANCE WITH THE HONG KONG ASSOCIATION OF BANKS ORDINANCE AND THE ASSOCIATION'S RULES ON INTEREST RATES AND DEPOSIT CHARGES, THE COMMITTEE OF THE ASSOCIATION HAS A STATUTORY OBLIGATION TO CONSULT THE FINANCIAL SECRETARY ON THE MAXIMUM INTEREST RATES IT SETS ON THE HONG KONG DOLLAR DEPOSITS GOVERNED BY THE INTEREST RATES RULES.

THIS

CONSULTATION IS CARRIED OUT BETWEEN THE CHAIRMAN OF THE ASSOCIATION AND THE SECRETARY FOR MONETARY AFFAIRS, UNDER DELEGATED AUTHORITY OF THE FINANCIAL SECRETARY, BEFORE THE ASSOCIATION'S COMMITTEE MEETING ON FRIDAYS.

WEEKLY

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