MPC’s rate cut sparks hope for economic growth, says Pichai

Finance Minister Pichai Chunhavajira commended the Monetary Policy Committee (MPC)’s decision to cut the policy rate, saying it would ease the burden on debtors and boost confidence in Thailand’s bond market.

On Wednesday, the MPC voted 5:2 to cut the policy interest rate by 25 percentage points to 2.25% per annum.

“I must thank the MPC for considering the issue carefully,” the minister said on Thursday, adding that he will closely monitor the impact of the rate cut.

He also said that the Finance Ministry will discuss the option of easily approving loans for the business sector with commercial banks, adding that state-owned banks had already done their best to improve liquidity in the economy.

Pichai, who also doubles as deputy PM, added that he hopes the MPC will consider another 25-percentage point cut at its next meeting, but its decision would depend very much on domestic and external factors.

As for the expected headline inflation rate, Pichai said the government expected inflation this year to be just 1%, though it wants to see the inflation rate rise to about 2-3% as that would help spur economic growth.

“I think the rate of inflation should not drop below 1%,” he said. The inflation target rate should be increased to help the economy.”

Pichai added that the Finance Ministry and Bank of Thailand should hold talks soon to agree upon a new inflation target.