Thai finance minister urges bank of Thailand to lower policy rate

[webfact]

The Deputy Finance Minister, Julapun Amornvivat, called on the Bank of Thailand’s Monetary Policy Committee (MPC) to consider lowering its policy rate. The request comes in a bid to alleviate the strain on the public, taking into account the impact of the policy rate on individuals rather than solely focusing on financial stability.

 

Julapun argues for a harmonious approach, stating that “fiscal and monetary policies must go together,” amid government efforts to bolster a slow economic recovery. The robust fundamentals of the banking system should be taken into account during the central bank’s policy review today, February 6, he added.

 

Last year’s economic growth slowdown was confirmed by both the Fiscal Policy Office and the Bank of Thailand. To counteract this, the government is seeking to implement short-term stimulus measures, such as the 10,000-baht (US$279) digital wallet handout, to help boost the economy.

 

Furthermore, Julapun suggests that legislation around the issuing of a 500-billion-baht (US$13.9 billion) loan bill to finance the digital wallet handout scheme should be considered by the government.

 

by Alex Morgan

Photo courtesy of Bank of Thailand

 

Full story: The Thaiger 2024-02-06

 

- Cigna offers a range of visa-compliant plans that meet the minimum requirement of medical treatment, including COVID-19, up to THB 3m. For more information on all expat health insurance plans click here.

 

Get our Daily Newsletter - Click HERE to subscribe

 

[JoePai]

Keep the Bank independent - away from Politicians ! 

[Mike Lister]

My guess is that this is the voice of business speaking that wants to increase profits and reduce loan repayments rather than any concern for the impoverished poor. If anyone really wanted to help the poor, reducing central bank interest rates from 2.50% to 2.25% is probably not the best way and certainly not the only way.

 

And as has been said previously, many many times, only Japan and Switzerland have lower rates, the primary reason for that is because inflation is still not tamed and lowering rates only exacerbates that problem.

[smedly]

1 hour ago, webfact said:

The Deputy Finance Minister, Julapun Amornvivat, called on the Bank of Thailand’s Monetary Policy Committee (MPC) to consider lowering its policy rate.

 

not your business, why have an MPC when you are constantly interfering, not a wise move to question policy in public now for the 2nd time

[hotchilli]

4 hours ago, webfact said:

The Deputy Finance Minister, Julapun Amornvivat, called on the Bank of Thailand’s Monetary Policy Committee (MPC) to consider lowering its policy rate. The request comes in a bid to alleviate the strain on the public, taking into account the impact of the policy rate on individuals rather than solely focusing on financial stability.

Not on the same page it seems.

[Mike Lister]

13 minutes ago, hotchilli said:

Not on the same page it seems.

Not even in the same book.

[vivananahuahin]

it is disinflation not deflation and still not negative, China had also and a devaluation of the currency was the point to bolster exports because growth faltering in Thailand and also kan 0.25% rates cut help a little not 10.000 to help the economy.

[Mike Lister]

16 hours ago, vivananahuahin said:

it is disinflation not deflation and still not negative, China had also and a devaluation of the currency was the point to bolster exports because growth faltering in Thailand and also kan 0.25% rates cut help a little not 10.000 to help the economy.

Once again, this is a USD story, not a Baht story or a BOT interest rate story. THB is valued against USD and USD has strengthened since the start of the year, especially since the start of this month. This is because fewer people believe the Fed. will cut rates as aggressively as hoped, beginning in March. As USD has strengthened, THB has devalued further, Thailand has little influence over that. Cutting the BOT rate is not going to change that THB value, if anything it will worsen matters. 

 

It's a fallacy that cutting interest rates helps exports, exports are only helped if the economy of the buying country is improving or in good shape and the buyer is able to buy. THB is already 35.5 which is far weaker than its 5 or 10 year average, cutting rates will only weaken it further and cause inflation to worsen, especially if the government goes ahead with its giveaway. USD/THB in the range of 32/34 is good value for both sides of the exports equation although expats and tourists want it much lower, I accept that!

 

And anyway, by what measure is the Thai economy faltering? Exports are down slightly because the China market is not performing but monthly exports are still pushing USD 23/24 billion per month which is well above trend and the 5/10 year averages. Tourism numbers are recovering and are heading back to pre-covid numbers? Where is this crisis that demands Central Bank rates be cut? Ah wait, it's the crisis that profits in business are not high enough and central bank rate is still too high, to borrow money to give away and ensure government popularity, hmmm!

 

https://www.marketwatch.com/investing/index/dxy

https://www.marketwatch.com/investing/index/dxy

https://www.xe.com/currencycharts/?from=USD&to=THB&view=1W

 

 

 

[john donson]

this means banks will now lower the interest they give, right? it was already so low compared to yanks and brits at 5%...

[Mike Lister]

3 minutes ago, john donson said:

this means banks will now lower the interest they give, right? it was already so low compared to yanks and brits at 5%...

Things are different here, the spread between the BOT rate and the rate a customer receives on their loan, can be massive, 10% of more.

[Mike Lister]

Here's the 4Q23 report on the economy by BOT,  things did slow down, mostly because of external factors. But it looks like tourism supported private consumption which remains the key economic driver. 

 

"The Thai economy slowed down from the previous quarter. Tourist expenditures and the value of merchandise exports, excluding gold, softened due to the subdued global demand together with structural factors, which negatively affected manufacturing production and private investment. Public spending also contracted from capital expenditures of the central government as well as investment from state-owned enterprises. Nevertheless, private consumption and activities in the service sector continued to improve and remained to be the key driver of the Thai economy".

 

https://www.bot.or.th/en/thai-economy.html

[vivananahuahin]

On 2/7/2024 at 7:21 AM, Mike Lister said:

Once again, this is a USD story, not a Baht story or a BOT interest rate story. THB is valued against USD and USD has strengthened since the start of the year, especially since the start of this month. This is because fewer people believe the Fed. will cut rates as aggressively as hoped, beginning in March. As USD has strengthened, THB has devalued further, Thailand has little influence over that. Cutting the BOT rate is not going to change that THB value, if anything it will worsen matters. 

 

It's a fallacy that cutting interest rates helps exports, exports are only helped if the economy of the buying country is improving or in good shape and the buyer is able to buy. THB is already 35.5 which is far weaker than its 5 or 10 year average, cutting rates will only weaken it further and cause inflation to worsen, especially if the government goes ahead with its giveaway. USD/THB in the range of 32/34 is good value for both sides of the exports equation although expats and tourists want it much lower, I accept that!

 

And anyway, by what measure is the Thai economy faltering? Exports are down slightly because the China market is not performing but monthly exports are still pushing USD 23/24 billion per month which is well above trend and the 5/10 year averages. Tourism numbers are recovering and are heading back to pre-covid numbers? Where is this crisis that demands Central Bank rates be cut? Ah wait, it's the crisis that profits in business are not high enough and central bank rate is still too high, to borrow money to give away and ensure government popularity, hmmm!

 

https://www.marketwatch.com/investing/index/dxy

https://www.marketwatch.com/investing/index/dxy

https://www.xe.com/currencycharts/?from=USD&to=THB&view=1W

 

 

 

not my opinion, we will see in may 2024.

[BenStark]

On 2/7/2024 at 5:06 PM, Mike Lister said:

On 2/7/2024 at 5:01 PM, john donson said:

this means banks will now lower the interest they give, right? it was already so low compared to yanks and brits at 5%...

Things are different here, the spread between the BOT rate and the rate a customer receives on their loan, can be massive, 10% of more.

 

@john donson was talking about deposit rates, which are very low and in line with BOT rates, and will now go even lower.

 

Who knows, loan rates may even increase at the same time, but that wasn't the subject of his post

[Mike Lister]

53 minutes ago, vivananahuahin said:

not my opinion, we will see in may 2024.

Which part is not your opinion?

[Mike Lister]

Two opposing arguments, cut needed or not....I'm with BOT, I say not.

 

Thai prime minister’s escalating clash with central bank worries investors

 

"THAILAND’S prime minister is mounting the biggest pressure campaign for lower interest rates in a decade, escalating a policy clash with the central bank that risks hurting investor sentiment towards one of Asia’s worst-performing markets.

Over the past week, Prime Minister Srettha Thavisin has bemoaned the country’s high borrowing costs on social media and called on the central bank to consider rate cuts.

 

His economic advisers launched an unprecedented campaign for urgent easing, taking to various social media platforms and prime-time television debates to highlight how commercial banks were profiteering from the high interest rates at the expense of small businesses and individual borrowers".

 

https://www.businesstimes.com.sg/international/asean/thai-prime-ministers-escalating-clash-central-bank-worries-investors

 

Exclusive: Thai central bank chief says current policy rate neutral, economy not in crisis

 

BANGKOK, Jan 23 (Reuters) - Thailand's central bank chief, under fire from the prime minister for not cutting rates, said slower-than-expected economic growth was not a crisis as portrayed by the government, nor would it be revived by its quick-hit stimulus measures.

The Bank of Thailand's current policy rate is broadly neutral, Sethaput Suthiwartnarueput told Reuters on Tuesday ahead of the central bank's next rate meeting on Feb. 7, adding that the country was not facing a deflationary situation.

 

https://www.reuters.com/markets/asia/thai-cbank-chief-says-current-policy-rate-neutral-economy-not-crisis-2024-01-23/