BoT urged to slash rates as risks mount

BoT urged to slash rates as risks mount

Policy rate at highest level in a decade

The Joint Standing Committee on Commerce, Industry and Banking (JSCCIB) has urged the Bank of Thailand to cut interest rates to better match the country's economy, which faces both internal and external risks.

High interest rates mean elevated borrowing costs, while the economy posted an uneven recovery amid the global economic slowdown, said Sanan Angubolkul, chairman of the Thai Chamber of Commerce, a key member of the JSCCIB.

He was speaking after the panel's meeting on Wednesday to discuss the economic outlook in 2024.

The JSCCIB made the comment on the same day Prime Minister Srettha Thavisin held talks with central bank governor Sethaput Suthiwartnarueput about the current interest rate, which has been criticised as being too high.

Mr Srettha, who earlier asked the central bank to start cutting borrowing costs, said he expressed his view to Mr Sethaput as he has no authority to interfere in rate decisions.

The Bank of Thailand has been raising its policy rate since August 2022, from 0.5% to 2.5% at present, the highest level in a decade.

According to the JSCCIB, businesses are struggling to deal with higher financial costs. Thailand is also facing high household debt, which weakens people's purchasing power, as well as risks from the impact of geopolitical conflicts.

The Ukraine-Russia war, the Israel-Hamas militant war, as well as the tension in the Red Sea, which can affect the global supply chain, were cited by Kriengkrai Thiennukul, chairman of the Federation of Thai Industries (FTI).

"The global economy is expected to remain weak this year due to many risk factors that can eventually affect the Thai economy, especially its export sector," he said.

The FTI said earlier that it was concerned about high levels of loan sharking, which represents 19.6% of household debt.

Last year, household debt was estimated to exceed 90% of GDP.

Payong Srivanich, chairman of the Thai Bankers' Association, said the JSCCIB wants the government to set up a fund to help businesses, especially small and medium-sized enterprises which struggle to access financial sources.

The JSCCIB on Wednesday maintained its forecast of key economic indicators this year. The panel expects Thailand's GDP to grow by 2.8-3.3%, with exports forecast to expand by 2-3%.

It adjusted its inflation projection, expected to register 0.7-1.2%, down from an earlier estimate of 1.7-2.2%.

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