Amadeusz Juskowiak

Nz central bank sees slower money credit growth

Monetary and credit growth rates in New Zealand are not expected to continue at current levels following the Reserve Banks move to tighten liquidity late last year Reserve Bank Governor Spencer Russell said

The monetary and credit growth figures for the December quarter were probably artifically inflated by unusually high growth in interinstitutional lending activity on the short term money market Russell said in a statement

The bank moved to tighten liquidity when the initial signs of the recent expansion became apparent in September and October last year Russell said

Broadly defined M3 figures released today showed growth of 178 pct in the year ended December compared with 131 pct in the year ended September

Annual growth of private sector credit in calendar 1986 was 307 pct compared with 165 pct in the September year

Available evidence suggests that corporate customers including nonbank financial institutions have been exploiting differences between interest rates on overdrafts with trading banks and rates in the call market Russell said