Banks expected to delay rate hike
The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) believes the banking sector will delay raising the interest rate in line with the Bank of Thailand's anticipated gradual policy rate hike.
Under the policy rate hike trend in the second half of this year, banks may not react immediately to the interest rate increase in order to support borrowers amid the gradual economic recovery, Payong Srivanich, chairman of the Thai Bankers' Association (TBA), said at a JSCCIB panel meeting on Wednesday.
The TBA has continued to discuss with the central bank the latter's policy rate normalisation and the banking rate movement, he added.
The Bank of Thailand has signalled a gradual policy rate normalisation and will not follow the US Federal Reserve's hawkish rate hike.
"Banks will also support the country's economic rebound and take care of customers, so banks may not follow the policy rate increase immediately. Banks will continue monitoring the economic situation and the central bank's policy rate move for the remainder of the year," Mr Payong said.
However, the TBA cannot assess specifically how long the delay of banking interest rate increase after the Bank of Thailand's policy rate hike. The interest rate move of the banking sector depends on the banks' strategies, he added.
Many economists expect the central bank's Monetary Policy Committee to increase the policy benchmark rate by 25 basis point at its meeting on Aug 10.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said after the JSCCIB meeting that business operators pay more attention to access to financial sources rather than an interest rate increase, given the economic recovery which opens investment opportunities.
The JSCCIB has maintained its prediction for GDP growth in 2022 in the range of 2.75% to 3.5%.
It also revised upward its forecast for the rate of inflation from 5-7% earlier to 5.5-7%.
It also revised upward the forecast for export growth from 5-7% to 6-8%.
The tourism sector is the key driver of Thailand's economic recovery this year and the JSCCIB predicts foreign arrivals would increase to 7-8 million this year.
Kriengkrai Thiennukul, chairman of the Federation of Thai Industries, said the real sector has been preparing for rising costs from both raw material prices in line with higher inflation and financial costs in accordance with the rising interest rate.
Mr Kriengkrai said the panel also noted that tensions in the Taiwan Strait could create higher risks for the global economy and it would bring some changing measures for internal trade and investment, such as sanctions.
Amid the higher geopolitical risks, it would also bring some opportunities for the Thai economy, such as higher chances for exports amid higher global demand and Thailand as a destination for foreign direct investment.
However, the private sector would also closely monitor the situation and Thai economic opportunities.