Cutting policy rate the right move: Thai private sector
Businesses express relief at the Monetary Policy Committee’s decision to reduce the policy rate from 2.50% to 2.25%
The Thai private sector believes the Bank of Thailand (BOT)’s cutting of the policy rate by 25 basis points, from 2.50% to 2.25% per annum, is well suited to the country’s current economic situation and will help several sectors, notably exports and tourism.
In a bid to help reduce the public’s debt burden, the central bank’s Monetary Policy Committee (MPC) voted 5:2 on Wednesday to lower the key policy rate with immediate effect after over a year of holding the rate at 2.50%.
Sanan Angubolkul, chairman of the Thai Chamber of Commerce, said on Wednesday that the 2.25% policy rate is suitable for the Thai economy and would help prevent the baht from becoming too strong against foreign currency.
This will help boost the competitiveness of the export and tourism sectors, he said.
He added that lowering the interest rate will also reduce the financial burdens entrepreneurs have been shouldering, thus accelerating the country’s economic recovery in the last quarter of 2024, while reaffirming that Thailand’s monetary and financial policies are in the same direction.
Chaicharn Charoensuk, president of the Thai National Shippers’ Council (TNSC), said the move to cut the interest rate was expected, but he thanked the MPC anyway for eventually implementing it.
“Lowering the policy rate would create a positive image for the Thai economy, as well as relieve pressure faced by several businesses, especially exporters who have been suffering from increased costs due to the baht appreciation, global oil prices, and other geopolitical factors,” he said.
However, it remains to be seen if the lowered interest rate would help boost domestic spending amid a stagnating economy, said Chaicharn. He added that any further reduction of the Thai interest rate also depends on several factors, including the future stance of the US Federal Reserve and currency exchange rates.
The TNSC chief called on the government to roll out additional measures to help Thai entrepreneurs for the rest of the year, including fixing the fuel price and postponing the hiking of minimum wages, as these moves could help boost Thailand’s export sector to expand by 2% year on year.
