Thailand's Central Bank May Lower Interest Rates if Digital Wallet Delayed

[snoop1130]

 

If the new Thai government decides to delay the implementation of the digital wallet policy, set for the last quarter of this year, the Bank of Thailand might be forced to lower its policy rate ahead of schedule. Experts fear that such a holdup could have a significant effect on the Thai economy.

 

Last week, the Monetary Policy Committee (MPC) of the central bank kept the rate at 2.5%. However, BofA Securities has noted that the Thai economy is projected to slow down in the second half of this year.

 

The report indicates that private spending is expected to slow down due to a lack of income growth among factory workers and self-employed people. The MPC expressed concern about slowing loan growth and worsening loan quality and said that they would closely watch their impact on economic activities.

 

"Considering these concerns and possibly less fiscal stimulus, we now expect a rate cut in December 2024 instead of mid-2025. We believe there might be further cuts until the policy rate drops to 1.75% by mid-2025 if economic conditions turn out worse than expected," the report added.

 

 

 

 

CGS International Securities (CGSI) suggests that even if the proposed 10,000-baht digital handout program is put on hold, the Pheu Thai-led administration would introduce extra stimulus to increase domestic buying power, which would help the retail sector.

 

CGSI believes that a rise in tourist arrivals will spur spending in tourist areas. If the digital handout is delayed, other stimulus projects throughout the year should speed up interest rate cuts, they added.

 

However, the report warned of possible risks from weaker domestic consumption, which could negatively impact sales growth. Notably, an increased minimum wage would raise operational costs, and retail stocks are expected to benefit most from the projected rate cut.

 

The home improvement sector might experience a sluggish recovery since demand for construction materials and other related products usually resurge six months after an interest rate cut, as per CGSI.

 

File photo for reference only

 

-- 2024-08-28

 

 

Get the ASEAN NOW daily NEWSLETTER - Click HERE to subscribe

[Tropicalevo]

Smart trick by the Pheu Thai.

Say that the cash handout will boost the economy.

Ask the BOT to drop interest rates.

BOT say no.

Delay the cash handout.

BOT says that a delay may force us to drop interest rates.

Double whammy for Pheu Thai - they can do the cash handouts after the interest rate is dropped.

[ikke1959]

Interest  rate are international issues.. Thailand can do as they want but if they manipulate too much it will have a negtive impact on the economy and exchange rate of the THB

[Srikcir]

12 hours ago, snoop1130 said:

the Bank of Thailand might be forced to lower its policy rate ahead of schedule.

BoT isn't forced by government actions or inactions, it responds to actual economic conditions - not economic suppositions. 

[hotchilli]

12 hours ago, snoop1130 said:

Experts fear that such a holdup could have a significant effect on the Thai economy.

The digital wallet or cash handout will have little or no lasting effect on the economy