The country's biggest business lobby has urged the Bank of Thailand to cut interest rates and work with the government on ways to revive business and consumption activity, after slashing its own estimate for economic growth.
A lower interest rate will be beneficial for businesses as it brings down overall costs, Kriengkrai Thiennukul, head of the Joint Standing Committee on Commerce, Industry and Banking (JSCCIB), told reporters on Wednesday.
The JSCCIB is the umbrella group for lobby outfits such as the Thai Chamber of Commerce, the Federation of Thai Industries (FTI) and the Thai Bankers Association.
Mr Kriengkrai did not specify how much of a rate cut the group wants, saying “we just want it to be as much as possible”.
The Bank of Thailand has kept borrowing costs at a decade high 2.5% since September, ignoring repeated calls by Prime Minister Srettha Thavisin and his aides to cut the policy rate. The BoT said last month that holding the rate steady has given it more options to deal with currency volatility, geopolitical risks and uncertainties stemming from the timing of the first rate cuts by the US Federal Reserve.
The business group’s call for cheaper borrowing cost comes a day after newly appointed Finance Minister Pichai Chunhavajira urged the BoT to support government policies to bolster Southeast Asia’s second-largest economy. Most banks cut the minimum retail lending rate by 25 basis points in response to Mr Srettha’s appeal to them to help small businesses and individual borrowers hit by high interest rates.
Mr Kriengkrai, who also heads the FTI, said the government and the central bank should talk to each other and work together as the “economy is very fragile and facing multiple risks.”
The group lowered its domestic growth forecast to a range of 2.2% to 2.7% this year from 2.8% to 3.3% previously, citing a worse-than-expected exports performance amid sluggish global trade. It now sees inflation in a range of 0.5% to 1%, lower than the 0.7%-1.2% band it predicted earlier.
The committee is also opposed to a government plan to raise the daily minimum wage for all workers to 400 baht from October, saying such a steep increase will hurt the economy and planned investments.
The current minimum wage rates range from 330 to 370 baht depanding on the province.
Mr Srettha’s government will convene a meeting of the tripartite committee overseeing minimum wages next week to discuss the increase, with the premier saying on Tuesday that his administration was committed to raising the pay for workers. Srettha’s Pheu Thai party has pledged to boost minimum wages to 600 baht a day within four years.