Finance Minister Suchart Thadathamrongvej is seeking the Bank of Thailand (BoT)’s cooperation in cutting down one-day bond repurchase rate from currently 3.75 percent, because instead of the policy lured people saving more, the central bank has stolen liquidity from the markets on commercial banks’ marginal gain speculation.

BoT’s higher bond repurchase rate had persuaded the commercial banks to park money at the central bank instead of issuing loans, because the bank deposit rate is currently at 2.0 percent when compare with BoT’s repurchase rate of 3.75 percent, Mr. Suchart said.

He said instead of driving the economic growth, the policy has put liquidity overabundance at BoT.

However, Mr. Suchart said the finance ministry will not encroach with the BoT decision in maintaining its bond repurchase rate.

“People are misunderstanding that increasing the interest rate will help improved saving, but in the economic condition that more people were being laid off and commercial banks are more cautious in issuing new loans, banks are just investing in the safer ways,” he commented.

Mr. Suchart pointed out that instead of the commercial banks enjoy a borrowing rate of 3.75 percent from BoT and a lending rate at 7-8 percent to business enterprises, they prefer a deposit rate of 2.0 percent paying to depositors and a marginal gain of 1.75 percent receiving from BoT.

“There is an overly sufficient liquidity of 450 billion baht at the central bank, which should be used in boosting the economic growth,” he said.

The finance minister remarked that BoT should not only cut down its current bond repurchased rate but stop issuing more new bonds, and consider bonds buyback from the markets to inject liquidity to the economic system as well.

He said the government prime objective now should be restoring consumer confidence, because it is pointless to inject liquidity into the marketplace while people were panic at spending and investing.