Thai industries target costs as rate hike looms
Thai industries are preparing to cut costs and raise capital in response to the possibility of an interest rate hike, the latest poll of the Federation of Thai Industries (FTI) showed.
The survey of 209 executives from 45 industry groups and 76 provincial industry councils, found that the majority of them believe the Bank of Thailand's Monetary Policy Committee (MPC) will have to raise the interest rate at their next meeting to combat the country's inflation, the highest in 13 years, and the several rate hikes by the US Federal Reserve.
Meanwhile, 33 per cent of respondents said they plan to cut operational and investment costs, while 19.6 per cent plan to increase cash flow along with a change in management strategy in response to the likely increase.
Montree Mahapruekpong, deputy chairman of the FTI, said more than half of the respondents (52.6 per cent) expect the BOT to gradually raise interest rates to reflect the current economic conditions, as well as introduce supportive measures such as soft loans, fixed-rate loans, debt restructuring, and tax breaks to assist businesses that have not fully recovered from the pandemic.
He added that while the continued weakness of the baht will help the country's competitiveness in the export sector, the price of energy, raw materials, and goods will continue to rise, forcing industries to raise product prices.
The FTI also advised Thai manufacturers to hedge against a weakening baht, such as through forward or options contracts.
The poll suggested the appropriate value of the baht for business operations should be 32-34 per US dollar to stabilise overall economic conditions.
