Finance Ministry urges BOT to cut rate amid decline in purchasing power

The government has missed its revenue target for the first four months of this fiscal year, said Lawaron Saengsanit, permanent secretary at the Ministry of Finance.

With 11% lower revenue collection than the same period last year, Lawaron said the figures point to an economic slowdown from decreased purchasing power.

Big purchases, like car and real estate sales, have also been impacted by the decade-high interest rates. However, any change to interest rates will take around six months to trickle down into the economy.

Lorawan played down concerns of capital outflows from Thailand from a interest cut, explaining that the Fed rate had been much higher than Thailand’s for a while now, and that lowering the rate would not affect the baht's conversion against the dollar.

Meanwhile, the University of the Thai Chamber of Commerce’s Centre for Economic and Business Forecast, predicts the interest rate to be cut by 25 to 50 basis points this year to achieve the BOT’s target inflation rate.

Thanawan Polvichai, the centre’s spokesperson, agreed that Thai purchasing power had decreased, and that lowering the key interest rate would be beneficial for key industries like exports and tourism.

Last month, the BOT’s Monetary Policy Committee snubbed Prime Minister Srettha Thavisin’s calls for lower rates. The BOT maintained that it was pursuing a fiscally neutral policy.