Loans to repair flood damage & competition with government banks (specializing in housing, SMEs, farming) keeping interest rates high at commercial banks. Click button to listen to Forces Against Lower Interest Rates to download Economics: Forces conspire against lower rates by Parista Yuthamanop High demand for restoration loans after the flooding has played a role in the banking system's sluggishness in cutting interest rates, says a Bank of Thailand senior official. Krirk Vanikkul, the central bank deputy governor for financial institution stability, said ample liquidity in the system by which banks record net deposits in the short-term bond repurchase market has constrained the effects of cutting the overnight interest rate. Specialised financial institutions' lower regulatory cost, allowing them to offer higher returns, is also a factor keeping commercial banks' interest rates high. Mr Krirk said the specialised market share in lending and deposits has risen rapidly in the last few years to 25%.  The central bank cut the policy interest rate by 25 basis points at both its Nov 30 and Jan 25 meetings, now at 3%.  But the banking system has been slow to cut rates, with average one-year deposit rates ranging from 2.25% to 3.45% yesterday, compared with 2.4% to 4.1% at the end of November. "Even with several factors, the banking system's interest rate will be driven by market forces," he said. He said the loan-to-deposit ratio, which gradually increased to 90% by the end of last year, reflected tightening liquidity, but current monetary conditions remain accommodative to both depositors and lenders. The central bank's plan of offering soft loans, enabled by executive decree, also saw banks retain liquidity for lending. Mr Krirk said soft loans would help lower restoration costs for the private sector, adding that banks' interest rate cuts were just a "symbolic" move. Net interest margin for commercial banks stands at 2.4%, barely changed from 2.5% a year ago. (Source: Bangkok Post, Economics, Forces conspire against lower rates, 2/02/2012, Parista Yuthamanop, link) depositors - people who keep their money at a bank in exchange for interest payments liquidity - สภาพคล่อง "in banking, liquidity is the ability to meet obligations when they come due without incurring unacceptable losses. Managing liquidity is a daily process requiring bankers to monitor and project cash flows to ensure adequate liquidity is maintained. Maintaining a balance between short-term assets and short-term liabilities is critical. For an individual bank, clients' deposits are its primary liabilities (in the sense that the bank is meant to give back all client deposits on demand), whereas reserves and loans are its primary assets (in the sense that these loans are owed to the bank, not by the bank). The investment portfolio represents a smaller portion of assets, and serves as the primary source of liquidity. Investment securities can be liquidated to satisfy deposit withdrawals and increased loan demand. Banks have several additional options for generating liquidity, such as selling loans, borrowing from other banks, borrowing from a central bank ... and raising additional capital. In a worst case scenario, depositors may demand their funds when the bank is unable to generate adequate cash without incurring substantial financial losses. In severe cases, this may result in a bank run. Most banks are subject to legally-mandated requirements intended to help banks avoid a liquidity crisis. Banks can generally maintain as much liquidity as desired because bank deposits are insured by governments ... A lack of liquidity can be remedied by raising deposit rates and effectively marketing deposit products. However, an important measure of a bank's value and success is the cost of liquidity. A bank can attract significant liquid funds. Lower costs generate stronger profits, more stability, and more confidence among depositors, investors, and regulators" (See Wikipedia) liquidity - in general, has many possible definitions: 1. having enough cash (or assets convertable to cash) to continue in business and continue paying off debt and liabilities; 2. having cash or at least being able to get cash quickly;  the speed that an asset can be turned into cash (cash is 100% liquid, a savings account a little less, a time deposit a lot less); 3. the availability of cash in the economy (through loans) to businesses and consumers (to meet their needs)   สภาพคล่อง tightening liquidity - loans and cash harder to get quickly central bank - the main government bank in a country that controls the supply of money in a country and loans, also provides financial services to the government and other banks (See Wikipedia) monetary policy - the way in which the central bank controls the supply of money and loans in the economy (See Wikipedia) policy interest rate - the interest rate that the central bank uses in monetary policy basis point - one hundredth of one per cent (0.01%) , used to express the interest rate on bonds (See Wikipedia) 25 basis points - 0.25% cut the policy interest rate  cut the policy interest rate by 25 basis points the central bank cut the policy interest rate by 25 basis points the central bank cut the policy interest rate by 25 basis points at both its Nov 30 and Jan 25 meetings, now at 3%   X constrains Y - X limits Y, X prevents Y from moving or changing too much repurchase market - the market for repurhase agreements, also called "REPO market" (See Wikipedia) ample liquidity in the system by which banks record net deposits in the short-term bond repurchase market has constrained the effects of cutting the overnight interest rate loan-to-deposit ratio - "a commonly used statistic for assessing a bank's liquidity by dividing the banks total loans by its total deposits. This number, also known as the LTD ratio, is expressed as a percentage. If the ratio is too high, it means that banks might not have enough liquidity to cover any unforseen fund requirements; if the ratio is too low, banks may not be earning as much as they could be... the higher the ratio, the more the bank is relying on borrowed funds, which are generally more costly than most types of deposits" (See Investopedia) the loan-to-deposit ratio, which gradually increased to 90% by the end of last year, reflected tightening liquidity the central bank's plan of offering soft loans, enabled by executive decree, also saw banks retain liquidity for lending net interest margin - a measure of the difference between the interest income generated by banks or other financial institutions and the amount of interest paid out to their lenders (for example, to depositors for money kept in deposits), relative to the amount of their (interest-earning) assets. It is similar to the gross margin of non-financial companies, it is usually expressed as a percentage of what the financial institution earns on loans in a time period and other assets minus the interest paid on borrowed funds divided by the average amount of the assets on which it earned income in that time period (the average earning assets)," another way of stating this is "the difference between the amount of interest paid on money borrowed and the amount of interest received from money that has been lent, expressed as a percentage of the average of assets that earn interest in a particular period" (See Wikipedia) barely - almost nothing happening แทบไม่เคยเกิดขึ้น barely changed - almost no change at all net interest margin for commercial banks stands at 2.4%, barely changed from 2.5% a year ago commercial banks - a bank with branches in many different places, that provides a range of services, especially related to bank accounts and loans and saving money for people and businesses (See Wikipedia) specialised financial institutions - banks that offer loans to farmers or for people buying homes, for example, or for export businesses or SMEs offer higher returns - offer higher interest rates to depositors who keep their money with the bank factors - the different things that affect the outcome of a situation, event, or decision ปัจจัย specialised financial institutions' lower regulatory cost, allowing them to offer higher returns, is also a factor keeping commercial banks' interest rates high. ample - a lot; enough   X conspires against Y - X makes Y less likely to happen conspire - to plan secretly with other people to do something bad, illegal or against someone's wishes วางแผนร้ายร่วมกัน economics: forces conspire against lower rates - various forces in the economy make lower interest rates (which would stimulate the economy) less likely restoration - bring back to normal, repair damage; recovery, revival, return, remaking การกลับสู่สภาพปกติ, การกลับมาแข็งแรง, การฟื้นคืน, การฟื้นฟู restoration loans - loans to repair flood damage to homes and businesses  restoration costs - the cost of repairing flood damage demand - the need and desire of customers to buy goods and services role - the position, function or purpose that someone or something has in a situation, organisation, society or relationship บทบาท interest - payments made for the use of another's money for a period of time High demand for restoration loans after the flooding has played a role in the banking system's sluggishness in cutting interest rates, says a Bank of Thailand senior official. deputy - a person who is given the power to do something instead of another person, or the person whose rank is immediately below that of the leader of an organisation รอง, ตัวแทน,ผู้รักษาการแทน central bank deputy governor - the official one level below the highest central bank official the "central bank governnor" stability - not changing suddenly and unpredictably; a situation without no harmful, sudden or unpredictable changes, so people can operate normally and successfully ความมั่นคง, เสถียรภาพ institution - an important tradition or system upon which society is based สถาบัน financial institution - banks and other companies that provide "financial services" like banks financial institution stability - when there are no big sudden changes harmful to bank operations (like sudden changes in bank assets or a run on the bank, etc) Krirk Vanikkul, the central bank deputy governor for financial institution stability, said ample liquidity in the system by which banks record net deposits in the short-term bond repurchase market has constrained the effects of cutting the overnight interest rate. deposit - an amount of money that a person keeps in a bank market share - the percentage of the customers in a market that a company has (See Wikipedia) market share in lending and deposits the specialised market share in lending and deposits has risen rapidly in the last few years to 25%.  the...