To boost the economy, the government wants to reduce the 25bp level.
Following Prime Minister Srettha Thavisin’s public call for a 25 basis point rate cut, pressure has been placed on the ( BoT ) monetary policy committee ( MPC ) of the Bank of Thailand today.
This highlights a consistent effort to persuade the BoT to lower interest rates, which the government views as an essential mechanism to revive an economy it believes is in crisis.
The MPC’s appointment on Wednesday and next week will take place in the midst of a policy interest rate that is at its highest level in ten years, remaining at 2.50 %. The government also plans to secure loans totaling 500 billion ringgit to finance its electric pocket handout plan.
A 25 basis point level reduce will support persons, no boost inflation, Mr. Srettha said in response to his call for the BoT to act on Tuesday.
He claimed that inflation has been below the lower end of the BoT’s goal range and bad for decades. So, he claimed that there would still be room for reduces even after the policy rate was reduced from 2.5 % to 2.25 percent.
The level can still be significantly reduced in the event of a crisis or other event. Why do n’t we get started right away? said the prime minister, who is also the minister of finance.
Mr. Srettha promised to speak with the government of the BoT about the situation.
” The Governmental Policy Office has been in regular touch with us. We speak in an open and non-aggressive way, the primary minister said.
In actuality, prices is not a problem. The issue is inflation. It’s time to lower interest rates right then. He continued,” I would like the MPC to consider the matter at its meeting on Wednesday.
Mr. Srettha accused the northern bank of harming the economy by maintaining an increased interest rate despite months of declining inflation in a post on X at the beginning of last month.
This came after his discourse in parliament on January 3 that suggested the central banks may consider risks to the country’s economy, including its precarious recovery, when determining monetary policy.
According to Mr. Srettha,” Monetary policy moving ahead should be in line with economic styles, tighter economic conditions, and the raise from government policies.”
A price reduction is” the way out of financial issues,” according to Premier Kittiratt Na-Ranong, who also noted that the central bank may support the administration’s policies.
Phumtham Wechayachai, the deputy prime minister and minister of commerce, stated that the government has been implementing macroeconomic policy to address the financial issues.
” The fiscal policy and the economic policy must go hand in hand.” I want to find out who is in charge of economic policy. What steps are they going to take? Do they intend to lower interest rates? In reference to the BoT, Mr. Phumtham said.
” The BoT and the authorities in charge of economic policy now bear responsibility. To solve issues, the two plans must be implemented simultaneously, he said.
BoT government Sethaput Suthiwartnarueput recently stated that state subsidies are to blame for the decline in consumer prices, despite the central bank’s indication that it does not see the need to strengthen rates any further. This indicates that the regulator may be hesitant to ease rates anytime soon.
Researchers anticipate that the MPC will prioritize balance and decide to leave the plan rate unchanged at the conference on Wednesday.
The BoT must be given the freedom to carry out its duties individually in order to preserve financial stability, according to Phornchanok Cumperayot Kouwenberg, a professor at Chulalongkorn University’s finance faculty.
The loans price reached a 10-year substantial of 2.5 % in September of last year when the MPC started raising prices in August 2022, increasing them by 0.25 percent items eight days.
In November 2023, the council stopped raising interest rates.
With an average of 3.25 % to 3.5 %, Thailand has the lowest policy rate in Southeast Asia.
Thailand’s inflation rate is even lower than that of its neighbors in the region.
Analysts anticipate that the MPC wo n’t lower its policy rate to stop capital outflow given the US Federal Reserve’s delay in starting rate reductions.
The overnight federal funds rate for the Federal Reserve is currently 5.5 %, which is a lot higher than the BoT’s 2.5 % policy rate.