Thailand’s private sector eyes interest rate cut to ease burden

However, several experts, including those from KResearch, predict that the MPC will maintain the current rate when it meets on October 16.

Nevertheless, many are also keenly observing whether the committee will consider a policy rate cut that has remained unchanged since August 2023.

Kriengkrai Thiannukul, chairman of the Federation of Thai Industries (FTI), told Thansettakij that several negative factors continue to affect the Thai economy, especially high household debt and diminished purchasing power.

“Entrepreneurs, especially those in the SME sector, are struggling with liquidity. The export sector is also vulnerable to risks stemming from geopolitical conflicts and the appreciation of the baht, which has become the region’s second-strongest currency after the Malaysian ringgit. This has diminished the competitiveness of Thai products,” he said.

He also noted that businesses are grappling with high costs as they continue borrowing from financial instituions to sustain operations. He urged the MPC to consider a minimum rate reduction of 0.25% to alleviate financial pressures on both businesses and individual borrowers.

Furthermore, he said, aligning interest rates with the global downward trend, as indicated by the recent 0.5% reduction by the US Federal Reserve – the first in four years – could be beneficial for Thailand.

“The issue of non-performing loans [NPLs] is escalating. Financial institutions are repossessing more homes and vehicles from those suffering from financial problems. If the interest rates are lowered, it will reduce financial costs for borrowers and SME entrepreneurs. More importantly, it could lead to a depreciation of the baht, benefiting exporters,” he added.

This perspective was supported by Sanan Angubonkul, chairman of the Thai Chamber of Commerce, who acknowledged that interest rates represent a significant cost burden for entrepreneurs. He expressed optimism that any further reductions would provide substantial relief, although he emphasised the importance of waiting for the outcome of the MPC meeting on October 16.

Echoing these sentiments, WHA CEO Jareeporn Jarukornsakul said interest rates play a critical role in business operations. She noted that BOT has kept the interest rates high for an extended period, and as a business leader, she believes it is essential for the MPC to consider adjustments in this context.