Big policy rate cut 'may cause bubbles' | Bangkok Post: business

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Big policy rate cut 'may cause bubbles'

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  • Newspaper section: Business
  • Writer: Nanchanok Wongsamuth & Somruedi Banchonguang
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The Bank of Thailand should not cut the policy interest rate significantly, as it could lead to bubbles in the market, economists have warned. 

Bunluasak Pussarungsri, head of research for CIMB Thai Bank's risk management group, said lowering interest rates to prevent baht appreciation needs to go hand in hand with measures to control loans, or else household debts will rise and eventually cause bubbles.

If the central bank is not careful and lowers interest rates by one percentage point, which would be too much, problems will arise, he told a seminar hosted by the National Economic and Social Advisory Council.

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