If BOT reduces policy rates, commercial banks will also cut loan rates: minister
The Bank of Thailand (BOT) should bring its policy rate down from 2.5% per annum when it meets the Monetary Policy Committee on February 7, Deputy Finance Minister Julapun Amornvivat said.
Julapun added that the policy rate should be lowered because it would help ease people’s economic hardship, especially since the 2.5% policy rate encourages commercial banks to keep their loan rates high.
“The high loan rates severely affect the people and businesses at a time when the country needs economic stimuli.
“We can see that banks’ interest rates are high, and they enjoy big profits. So, I would like the BOT to consider the people as well. The central bank should not just consider monetary stability, but also take care of the living, otherwise, everybody will die,” Julapun said.
He also accused the BOT of using the wrong monetary policy to raise or maintain a high policy rate, even though the country’s inflation has been in minus territory for several months now.
BOT governor Sethaput Suthiwartnarueput has been squabbling with Prime Minister Srettha Thavisin, who also doubles as finance minister, since he took office in September.
The government has been pushing the central bank to ease the monetary policy and lower policy rates, yet the BOT has been insisting that it has made the right decision to maintain a high policy rate to tame inflation.
Sethaput has been insisting that the country’s minus inflation was a short-term effect of the government’s ongoing measures to reduce oil and power prices. He said the country’s real inflation could still be high and needed a high policy rate to control it.
