The finance minister and the Reserve Bank governor have deployed a somewhat curious argument to explain that there is sufficient liquidity in the economy. They tell us the problem is not liquidity but high interest rates. There is apparently plenty of money available if you are prepared to pay the going interest rate. The statement is quaint. On that reasoning there never is or can be a liquidity shortage because there will always be some interest rate at which one can borrow.
Interest rates are too high for normal commercial purposes and certainly too high for making fresh investments. The authorities mislead themselves by simply looking at growth in deposits. Banks are paying high deposit rates. If they reduced their lending rates their would probably be a backwardation
