Policy rate rise expected
Panel poised to raise policy rate by 0.50%
The meeting of the Bank of Thailand's Monetary Policy Committee (MPC) next week is expected to raise the policy rate by 0.50%, according to Pipat Luengnaruemitchai, chief economist of KKP Research under Kiatnakin Phatra Securities Public Co.
The MPC is scheduled to hold its next policy meeting on Aug 10, when economists expect the rate to be hiked from the current record low of 0.50%, which has been left unchanged since May 2020.
The rate hike is aimed at taming persistently high inflation.
Mr Pipat said many central banks have raised policy rates at an aggressive level by 0.50-0.75% to wrestle control over high inflation and now raising the policy rates by a high level has become a common approach among many central banks.
According to the Trade Policy and Strategy Office under the Commerce Ministry, headline inflation in June, gauged by the consumer price index (CPI), rose 7.66% year-on-year from June 2021, accelerating from 7.1% in May and 4.7% in April.
KKP Research has assessed that the economy will gradually recover from a low base.
GDP is expected to grow at 3.3% this year as consumption and investment start to return to normal, exports grow with the global economy, tourism revives faster than expected and agricultural revenues improve with rising oil and commodity prices.
However, the health of the economy is still worrying due especially to uneven recovery. Many sectors have not yet returned to the pre-Covid state.
The economy is facing risks from inflationary pressure and the rising cost of living while income and the economy have not fully recovered.
Interest rates are on the way up as a result of inflationary pressure and central banks around the world pushing to raise interest rates.
A possible global economic slowdown or recession in the near future may also affect the pace of recovery of the Thai economy, he added.
In a separate matter, Kiatnakin Phatra Financial Group (KKP) for this year has set its commercial bank's net loan growth target at 16%, according to Aphinant Klewpatinond, KKP's chief executive.
The group performance in the first half of 2022 improved continuously due mainly to commercial banking.
Loans grew by 10% from the end of 2021, especially in the auto hire purchase and home loan segment.
Mr Aphinant said KKP will continue to focus on commercial banking and capital markets to develop complete and seamless services for customers and diversify sources of income to prepare for a more volatile future.
KKP continues investing in systems for its core businesses, such as loans that it believes have room for growth.
However, KKP views that the overall economic outlook is still grim due to inflation, high interest rates and high household debt, Mr Aphinant added.
"We have thus prepared to assist customers who may be affected by prolonged economic slowdown caused by the pandemic. However, sustainable relief efforts rather than immediate measures will be emphasised in order to best benefit customers during the prolonged economic downturn."