Thai Chamber of Commerce calls for rate cut at next meeting

Thai Chamber of Commerce calls for rate cut at next meeting

Sanan says economic vulnerabilities persist

A man shops for decorative items and incense sticks in Bangkok's Chinatown on Thursday, ahead of the Lunar New Year celebrations. (Photo: Nutthawat Wichieanbut)
A man shops for decorative items and incense sticks in Bangkok's Chinatown on Thursday, ahead of the Lunar New Year celebrations. (Photo: Nutthawat Wichieanbut)

The Thai Chamber of Commerce (TCC) hopes the Bank of Thailand will reduce interest rates at its next meeting, noting that the economy is recovering but remains fragile.

Chamber chairman Sanan Angubolkul said the business sector has acknowledged the considerations and decision of the central bank's Monetary Policy Committee (MPC) to maintain its policy rate at 2.5% at its meeting on Wednesday, but suggested that at the next meeting the MPC should consider lowering interest rates to alleviate the burden on the public and reduce financial costs for businesses which would help mitigate the risk of a rise in non-performing loans.

The Bank of Thailand is also being advised to introduce new measures to support easy access to funding for businesses. These steps are seen as crucial mechanisms to boost domestic purchasing power and provide momentum for the ongoing recovery of the economy, said Mr Sanan.

"The private sector sees that although the overall outlook for the economy this year shows signs of recovery, supported by the rapidly recovering tourism sector, there are still vulnerabilities," Mr Sanan said.

"Domestic purchasing power has not yet fully rebounded, while the manufacturing sector shows a contracting trend. Additionally, the economy is bracing for various geopolitical issues and upcoming elections in several countries that may lead to significant policy changes, the impact of the Israel-Hamas conflict resulting in increased shipping costs and affecting energy prices, unrest in neighbouring countries and higher competition with Chinese products in the regional market."

Meanwhile, Mr Sanan said businesses are under pressure from relatively high interest rates which directly impact their operating costs. The public also faces a high burden of debt, as borrowing remains at elevated levels, he said.

"Inflation figures declined for a fourth consecutive month in January, partially attributed to technical adjustments following the government's policy to reduce the cost of living related to energy. This decline further highlights the vulnerability of domestic purchasing power," he said.

The MPC at its meeting on Wednesday decided to maintain its policy rate at 2.5% and trim its 2024 growth projection to a range of 2.5-3% from 3.2% in its earlier projections.

The central bank has maintained its policy rate at 2.5% for two consecutive meetings.

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